The Parliament has declared amendments to the Banking Regulation Act to bring co-operative banks under RBI supervision, a move intended at protecting the interest of depositors.
Let’s summaries the Notifications issued:-
Co-operative banks under RBI supervision
In order to bring co-operative banks under the supervision of the RBI, Parliament has passed amendments to the Banking Regulation Act. The step is directed at protecting the interest of depositors. Rajya Sabha passed the Banking Regulation (Amendment) Bill, 2020 by a voice vote; the new amendment will replace an ordinance that came into effect on June 26. Parliament passed the amendment on September 16.
Know About Banking Regulation (Amendment) Bill
The Banking Regulation Act, 1949 is a law that governs banking firms in India. It was issued as the Banking Companies Act 1949. It came into force from 16 March 1949 and was replaced to the
Banking Regulation Act, 1949 from 1 March 1966. Now the bill proposes amendments to the Banking Regulation Act, 1949, and will replace the Banking Regulation (Amendment) The ordinance, 2020. The bill will also permit the RBI to initiate a scheme for reconstruction or amalgamation of a stressed lender without inflicting a moratorium.
Benefits of New Banking Regulation act 2020
The bill comes for enhancing the co-operative banks by increasing their –
- Enabling access to capital, professionalism,
- Improving governance, and
- Ensuring sound banking through the RBI.
- The main objective of the amendments is to completely protect the interest of depositors.
Further points mentioned in the bill:
There are further points regarding the New Banking Regulation Act 2020. Some of them are –
- A co-operative bank may announce equity, preference, or special shares on face value or at a premium to its members, via a public issue or private placement
- The RBI has the right to exempt a co-operative bank or a class of co-operative banks from certain provisions of the Act.
- The RBI may replace the board of a multi-state co-operative bank for up to five years under certain conditions.
- The amendment has applicable to cooperative societies that are engaged in banking activities.
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