Alarmed at large scale money laundering by cooperative banks, the government is preparing to take aggressive steps to prevent, detect and penalise such errant banks.
An Inter-Ministerial Group (IMG) is likely to be set up to scrutinise the role of cooperative banks in facilitating money laundering.
“The IMG among other things will also go into the existing rules and regulations, and suggest measures to block loopholes, which many cooperative banks have taken advantage of,” a senior government official told HT.
“However, the task is a challenging one given the number of cooperative banks in India.”
The development is a fallout of the annual Economic Intelligence Committee meet held last month under the chairmanship of finance minister P Chidambaram where the issue was discussed threadbare.
In India, there are about 450 cooperative banks at the regional, state and district levels.
The government’s keenness to clamp down errant cooperative banks acquires significance in the backdrop of reports that many individuals connected to political parties had allegedly laundered thousands of crores rupees through fictitious accounts in an Uttar Pradesh-based cooperative bank.
While the RBI had recently filed a criminal case against the said bank, Indian Mercantile Cooperative Bank, it was the Intelligence Bureau which had alerted the finance ministry of the scam.