Lok Sabha passes Banking Regulation (Amendment) Bill 2020, cooperative banks to come under RBI

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With the passage of the Bill, the Centre aims to bring cooperative banks under the supervision of the RBI 

The Lok Sabha on Wednesday passed the Banking Regulation (Amendment) Bill, 2020 seeking amendments to the Banking Regulation Act, 1949.

With the passage of the Bill, the Centre aims to bring cooperative banks under the supervision of the Reserve Bank of India (RBI).

The Bill was introduced keeping in view the deteriorating condition of cooperative banks in the country.

"We are trying to bring this amendment to protect the depositors. As in some unfortunate situation in banks, depositors are put to hardship," finance minister Nirmala Sitharaman said in Lok Sabha.

She said that for the past two years, depositors of cooperative banks and small banks have been facing problems adding that the amendment was not for the Centre to take over the cooperative banks.

The Banking Regulation (Amendment) Bill was first introduced in March during the Budget session this year. However, it could not be passed due to COVID-19 outbreak. In June, the Union Cabinet approved an ordinance to bring 1,482 urban and 58 multi-state cooperative banks under the supervision of the RBI.

With the passage of the Bill, the ordinance ceases to exist.

"Due to the pandemic, the stress in cooperative banks increased and the gross NPA ratio increased from 7.27 percent in March 2019 to over 10 percent in March 2020. Therefore it was felt that to protect depositors' interest we should have the ordinance brought in," the finance minister said.

 

Image credit: Financial Express

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