Calcutta, May 9 :    Calcutta, May 9:  Stung by the gilts scam rocking the co-operative banking sector, the Reserve Bank of India has submitted a proposal to the finance ministry to set up an apex co-operative bank that will supervise and monitor operations of all such entities in the country. The proposed apex bank will comprise representatives from the RBI, National Bank for Agricultural and Rural Development (Nabard) and co-operative societies. 'The dual supervision of co-operative banks is creating problems for the Reserve Bank,' sources said. Though registered under the Co-operative Societies Act of respective states, co-operative banks are regulated by the Reserve Bank in all key aspects of banking. They are governed by the Banking Regulation Act, 1949 and Banking Laws (Co-operative Societies) Act, 1965. The RBI wants the apex body to dedicate itself to the supervision and monitoring of co-operative banks. The issue of regulating co-operative banks was discussed at the central board meeting of the Reserve Bank here today. It was attended by central bank governor Bimal Jalan and three RBI deputy governors - Vepa Kamesam, Y. V. Reddy and G.P. Muniappan. Other directors on the RBI board who attended the meeting were Y. H. Malegam, A. P. J. Abdul Kalam, K. Madhav Rao, Ratan Tata, Amrita Patel, Vijay Shankar Vyas, H.P. Ranina, Suresh Krishna, Kushal Pal Singh and D.S. Brar. The board also reviewed the operations of the forex department, in addition to the central bank's debt management department. The RBI governor told directors that the chairman of the Nagpur District Central Co-operative Bank was empowered to invest in securities through subsidiary general ledger (SGL), not in instruments other than gilts. He personally finalised the deals and allowed these transactions. The bank did not prepare half-yearly reviews for submission to the board, Nabard or the RBI. The RBI is unhappy over the way urban co-operative banks have been regulated. It feels Nabard has not delegated the powers in a proper manner. Jalan told the Reserve Bank board the Nagpur co-operative bank violated a key guideline that requires transactions done through an individual broker to be capped at 5 per cent. The bank also fell foul of the law by making investments in shares under a buy-back arrangement. In addition, it violated a Nabard norm that limits lending to others outside the co-operative - such as the companies, corporate registered bodies, agencies and institutions - at 25 per cent of the bank's total capital. For Nagpur District Co-operative Bank, that limit works out to Rs 11.25 crore. The RBI has found out that bonds supposed to have been purchased by the bank were never received, and later shown as if they were exchanged for government securities - which are missing too. The securities that were never handed over to the bank were purportedly a part of its investments under the statutory liquidity ratio (SLR).