Amendments to Banking Regulation Act Passed in Parliament, Cooperative Banks to Now Function Under RBI’s supervision

New Delhi: In a move aimed at protecting the interest of depositors, Parliament on Tuesday passed amendments to the Banking Regulation Act, thus bringing cooperative banks under the supervision of the Reserve Bank of India. Also Read – RBI Issues Norms For Banks to Appoint Chief Compliance Officers

The Banking Regulation (Amendment) Bill, 2020, which replaces an ordinance promulgated on June 26, was passed by a voice vote in Rajya Sabha. The amendment was approved from Lok Sabha on September 16. Also Read – Last Date to Submit Life Certificates by Pensioners Now December 31

Union Finance Minister Nirmala Sitharaman, while answering short debate on the bill in Rajya Sabha,  said that the amendments have been brought to completely protect the interest of depositors. Also Read – Come up With Something Concrete in 2 Weeks: Supreme Court to Centre on Loan Moratorium Plan

She clarified that the amendment is only for cooperative societies engaged in banking activities.

“During the COVID period many cooperative banks have come under stress. Their finances are being closely monitored by the regulator RBI,” Sitharaman said.

The bill comes in the backdrop of the PMC Bank Scam and seeks to strengthen cooperative banks by increasing their professionalism, enabling access to capital, improving governance and ensuring sound banking through the RBI.

Sitharaman said the government was able to quickly resolve the troubled Yes Bank as it was governed by commercial bank rules, but the resolution to the PMC Bank crisis is yet to be found, thus justifying the need for the amendments.

The upper house debated the bill amid several members boycotting proceedings till the suspension of eight MPs is revoked.

As many as eight members of the Rajya Sabha were suspended on Monday after the government brought a motion in this regard, which was passed by the House by voice vote.

(With inputs from PTI)