October 10, 2019 / 9:00 AM / 11 days ago

India considers stricter laws to curb frauds in co-operative banks: finance minister

FILE PHOTO: India's Finance Minister Nirmala Sitharaman and the Reserve Bank of India (RBI) Governor Shaktikanta Das arrive to attend the RBI's central board meeting in New Delhi, India July 8, 2019. REUTERS/Anushree Fadnavis/File Photo

MUMBAI (Reuters) - The India government is considering amending laws to curb malpractices at co-operative banks in Asia’s third-largest economy, following allegations of fraud in Punjab and Maharashtra Co-operative Bank (PMC), Finance Minister Nirmala Sitharaman said on Thursday.

The government has asked its economic affairs and banking division to study the activities of multi-state cooperative banks such as the PMC, Sitharaman said.

She also plans to meet the Reserve Bank of India (RBI) Governor Shaktikanta Das later in the day to discuss a faster resolution plan for the PMC.

Bank officials on Tuesday had accused PMC Bank’s management of concealing non-performing assets and disbursing loans leading to a loss of at least 43.55 billion rupees ($617 million), adding that the bank camouflaged its financials.

The PMC case has sparked renewed concerns about India’s banking sector, which has been rocked by a multi-billion dollar fraud at a state-run lender, the collapse of a major infrastructure lender, bad loan issues at state-run banks and a liquidity squeeze that has hit shadow lenders.

More than two dozen co-operative banks are now under the RBI administration, but PMC Bank - with deposits of 116.2 billion rupees as of March 31 - is by far the largest.

Reporting by Swati Bhat, Editing by Sherry Jacob-Phillips

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