Punjab and Maharashtra Co-operative Bank Ltd (PMC) in Mumbai was placed under restriction this week. These include Kapol Co-operative Bank Ltd, City Co-operative Bank Ltd, Karad Janata Sahakari Bank Ltd, Shivam Sahakari Bank Ltd, and Youth Development Co-operative Bank Ltd. Of course, the urban co-operative banks problem falls in RBI’s domain. And the crumbling structure of some urban co-operative banks so far considered safe reveals the rot within. When bad loans piled up and the value of a co-operative sugar factory or mill declined, politicians bought them. Two years later, the government rolled back the caps on surplus molasses, leading to massive gains for the co-operative sugar factories.

Source: Mint September 29, 2019 15:30 UTC