Urban Cooperative Banks has raised alarms in government as it was said to be used as a conduit for money laundering. These banks hold deposits nearing INR2 lakh crore for its depositors.

This issue was discussed over a recent meeting of the Economic Intelligence Council, which is chaired by Finance Minister P Chidambaram. The discussion was done as there is dual control by both federal and state governments where multi-state cooperative societies or state cooperative societies. The said meeting was attended by senior officials of Central Economic Intelligence Bureau, the Reserve Bank of India and the Ministry of Finance. The common theme was to devise ways to check money laundering that is done through these financial institutions.

According to the minutes of the meeting, "The issue also acquires serious proportions because it jeopardizes the hard earned money of the public which is put at a stake due non-adherence to the RBI regulations or instructions and also letting the banking channels being abused by unscrupulous people in laundering money which can play havoc with the