The Rajya Sabha on Tuesday passed the Banking Regulation (Amendment) Bill, 2020, to bring cooperative banks under the supervision of the Reserve Bank of India (RBI).
During the discussion on the bill, Finance Minister Nirmala Sitharaman told the Chamber that several cooperative banks were under stress during the Covid-19 pandemic and that their finances are being closely monitored by the banking sector regulator. Reserve Bank of India (RBI).
The amendment is to protect the interests of depositors, and the legislation will help speedy recovery in distressed cooperative banks without any moratorium, he said.
Sitharaman assured the Chamber that the legislation empowers the central bank to regulate only the banking activities of cooperatives and is not applicable to a primary agricultural credit society or a cooperative society that provides financing for agricultural development.
The bill was already approved by the Lok Sabha on September 16.
Also read: protests at night, working past midnight for two consecutive nights
India has different types of cooperative banks: urban cooperative banks (UCB) and rural cooperative banks (RCB). RCBs are classified into state cooperative banks (StCB) and district central cooperative banks (DCCB). According to the RBI, as of March 31, 2019, there were 1,544 UCBs, 34 StCBs, and 352 DCCBs. The total amount of deposits of all UCBs as of March 31, 2019 was Rs 484,315.85 crore and RCBs was Rs 505,859.16 crore.
The amendments do not affect the existing powers of state cooperative partnership registrars under state cooperative laws.
The legislation also allows for a reconstruction or merger scheme of a bank to protect the interests of depositors without resorting to moratoriums that freeze depositors’ withdrawals. The bill replaces an ordinance that was enacted in fulfillment of the president’s commitment to “guarantee the safety of depositors in all banks” on June 26.
.
