Key points:
– Lok Sabha on Wednesday passed the Banking Regulation (Amendment) Bill, 2020.
– The bill asks for amendments in the Banking Regulation Act, 1949.
– The Banking Bill has been passed to protect the depositors from any hardships.
– The RBI won’t control the Co-operative Banks but just help in their smooth regulation.
The Monsoon session of the Parliament has started off with its first Bill being passed. Bearing in mind the worsening condition of cooperative banks in the country, Lok Sabha on Wednesday passed the Banking Regulation (Amendment) Bill, 2020. The Bill proposes amendments to the Banking Regulation Act, 1949.
With this new Bill, the central government aims to bring cooperative banks under the supervision of the Reserve Bank of India (RBI).
Lok Sabha passes the Banking Regulation (Amendment) Bill, 2020.
◾The bill seeks to protect the interests of depositors and strengthen the cooperative banks by improving governance pic.twitter.com/g2ykl40n1U
— All India Radio News (@airnewsalerts) September 16, 2020
Finance Minister Nirmala Sitharaman said in Lok Sabha on Wednesday that,
“We are trying to bring this amendment to guard the depositors. As in some unfortunate situation in banks, as seen in the last 2 decades, 430 co-operative banks have been de-licensed and gone in to liquidation leaving the depositors suffering.”
Sitharaman responded to the doubts elevated by 32 MPs during the session saying,
“We want to regulate banking activity, within our power and will not interfere into ‘federalism’.”
“We don’t want the banks to drop their identity but to function and govern like a bank without creating hardships for the depositors,” Sitharaman further added.
For better governance of cooperative banks, we need to have these regulations coming in: Smt @nsitharaman in her reply to the debate on Banking Regulation (Amendment) Bill 2020 in LS pic.twitter.com/C8pOxJVM9n
— NSitharamanOffice (@nsitharamanoffc) September 16, 2020
“This Bill does not regulate cooperative banks as co-operative banks are already being regulated by RBI since 1965. The amendment is not for central govt. to take over the cooperative banks. As mentioned in the 43rd and 45th entry the banking sector already is under RBI,” Sitharaman said.
While we acknowledge the important contribution of cooperative banks, it is necessary in the interest of the depositors and banks themselves that we extend some banking laws to the cooperative banking activity: Smt @nsitharaman on Banking Regulation (Amendment) Bill 2020 in LS pic.twitter.com/Crn4TeSa9P
— NSitharamanOffice (@nsitharamanoffc) September 16, 2020
For the Central Bank to build up a scheme to ensure the interest of the public, banking system, account holders in the bank, and banking company’s proper running, without troublemaking any banking functionalities, few more amendments have been wished-for under Section 45 of the Act.
The Bill could not be passed in March suring the Budget session because of the sudden Lockdown. In June, the union cabinet permitted the ordinance to bring 1,482 urban and 58 multi-state cooperative banks under the supervision of the central bank.
