Govt mulls 4th RBI deputy governor

The government is weighing the option of creating the post of a fourth Deputy Governor in the Reserve Bank of India to oversee activities of the co-operative banking sector, which has seen a series of scams in the last two years.

"There is a provision for a fourth Deputy Governor in RBI. We are considering the option, and give the Deputy Governor the responsibility of regulating co-operative banks," a senior finance ministry official said in New Delhi on Monday.

RBI is now headed by Governor Bimal Jalan. The three Deputy Governors are Rakesh Mohan, Vepa Kamesam and G P Muniappan.

The idea of appointment of a fourth Deputy Governor cropped up after scams in Madhavpura Mercantile Co-operative bank and half-a-dozen other co-operative banks in the last two years.

The scams took place due to the laxity in regulation for co-operative banks, which are set up in accordance with state co-operative acts but also come under the ambit of the central bank.

"Co-operative banks, like any other bank in the country, should be regulated by the RBI," the official said, adding all states need to amend their co-operative acts to empower RBI.

There is also a proposal of making it mandatory for co-operatives engaged in production to get registered under the Companies Act.