Kerala to move SC this week against RBI order curtailing powers of primary co-op societies

Supreme court | Shutterstock images

Thiruvananthapuram: The Kerala Government will file a case this week itself in the Supreme Court of India against the decision of the Reserve Bank of India (RBI) to impose stringent regulatory measures on the primary cooperative societies and banks in the State.

A meeting of the legal experts convened by the Standing Counsel for the State Government in the Supreme Court will be held in New Delhi today to fine-tune the petition to be filed in the Supreme Court. The meeting will be attended by the Advocate General of Kerala and other senior lawyers.

Earlier, the Chief Minister had entrusted Cooperation Minister VN Vasavan with the task of coordinating the State's legal fight.

A meeting, attended by the State Cooperation and Law Ministers, Standing Counsel for the State Government in the Supreme Court, the Chief Minister's legal advisor, the State Law Secretary and the Advocate General of Kerala was held last week.

The legal advice received by the State is that the primary cooperative societies come under the service sector and not under the banking sector. Currently, "Neethi'' medical stores and cooperative societies are functioning under the service sector.

The State's argument is that the move by the Central Government to interfere with the functioning of the cooperative sector in States was earlier restrained by the Supreme Court while disposing of a case linked to the 97th Constitutional amendment.

According to the State Government, cooperation is purely a State subject. Kerala further points out that there were many verdicts passed by the Supreme Court saying that cooperation is a State subject. So, the legal fight to be put by Kerala may even go up to the Constitutional Bench of the Supreme Court.

The recent RBI guidelines asked the primary cooperative societies not to use the term "cooperative bank".  The RBI also restrained the cooperative societies from taking deposits from the members who do not have voting right. The RBI's latest guidelines would adversely hit the functioning of almost 1,625 primary cooperative societies and thousands of cooperative banks in Kerala. The RBI came up with such stringent provisions on the basis of the Banking Regulation Amendment Act passed by Parliament in September.

Kerala to seek support of other states

Kerala would seek the support of other States, which is also going to be hit by the new RBI guidelines. As a first step, the State Government will send a letter to the Cooperation Ministers of Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra, West Bengal and Punjab, with the request that they should join as a party in the case to be filed by Kerala in the Supreme Court.

The Kerala Government is hopeful that non-BJP Governments at various States would throw their weight behind Kerala in its fight against the repressive actions of the Central Government.

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