Lawstreet Journal

Cooperative Banks will Come Under the Regulatory Framework of RBI: Banking Regulation (Amendment) Bill, 2020 [READ BILL]

Lawstreet Journal 19 Sep 2020 1:31am

Image courtesy: Lawstreet Journal Executive Cooperative Banks will Come Under the Regulatory Framework of RBI: Banking Regulation (Amendment) Bill, 2020 [READ BILL]

Finance Minister Nirmala Sitaraman introduced Banking Regulations (Amendment) Bill, 2020 which was passed by Lok Sabha by voice vote on September 16th, 2020. The Bill is aimed to protect the interest of depositors and regulate the functioning of Cooperative Banks by bringing them under the regulatory framework of the Reserve Bank of India. The Bill also seeks to replace the Banking Regulation (Amendment) Ordinance, 202 (ord. 12 of 2020) promulgated by the President June 26th, 2020. The statement of the and objects annexed to the Bill noted, “certain amendments were necessary for the parent Act to provide for better management and proper regulation of co-operative banks and to ensure that the affairs of co-operative banks are conducted in a manner that protects the interest of the depositors, by increasing professionalism, enabling access to capital, improving governance and ensuring sound banking through Reserve Bank of India”. 

The amendments were majorly done in Section 3,36AAA, 36AAB, 49B, 56, 53A, 12(i) and in Section 45 sub-section (3), (4), (5), (6), (15). The amendments proposed in Section 45 were to enable the Reserve Bank of India to construct a scheme to protect the interest of the public, the banking system, depositors or to secure the banking company’s proper management, without first making an order of moratorium so as to avoid disruptions in the financial system. 

Further, the bill doesn’t apply to primary agricultural credit societies, co-operative societies whose principal business is long term financing for agricultural development. Further, a Co-operative bank will not be able to… Continue Reading...

Tagged: Reserve Bank of India  
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