The government of India has decided to bring urban and multi-state co-operative banks under the supervision of the Reserve Bank of India (RBI), the country’s central bank.

The decision was announced by Union Minister Prakash Javdekar and the Union Cabinet has approved the ordinance.

Under this move, government-owned banks including 1,482 urban cooperative banks (UCBs) and 58 multi-state cooperative banks are being brought under the supervisory powers of the RBI.

The powers vested upon the central bank, as applies to the scheduled banks, will now also apply to the cooperative banks in the country, said Javdekar.

Union Minister Prakash Javadekar said: “The decision to bring 1,540 cooperative banks under RBI’s supervision will give an assurance to more than 86 million depositors in these banks that their money amounting to INR4.84trn ($64.01bn) will stay safe.”

The plan to bring the co-operative banks under the RBI’s supervision was first revealed by India’s finance minister Nirmala Sitharaman during the Budget 2020 session.

Since a bill could not be passed in the budget session of the parliament due to the Covid-19 pandemic, the government brought in an ordinance.

From the date of approval on the ordinance from the country’s president Ram Nath Kovind, the co-operative banks will come under the governance of RBI with immediate effect.