RS passes Banking Amendment Bill to put cooperative banks under RBI ambit

The Rajya Sabha Tuesday passed the Banking Regulation (Amendment) Bill 2020 via voice vote.

The Amendment, which Lok Sabha approved on September 16, replaces an ordinance that was promulgated on June 26.

The bill will allow RBI to initiate a scheme for amalgamation or reconstruction of a bank without placing it under moratorium.

The bill comes in the backdrop of the PMC Bank scam and seeks to strengthen co-operative banks by professionalising them, improving governance, ensuring access to capital and enabling sound banking through the RBI. The Act, however, excludes certain co-operative societies such as co-operative land mortgage banks and primary agricultural credit societies. 

Union Finance Minister Nirmala Sitharaman, during a discussion in the Upper House, said that these amendments seek to protect the interests of depositors in co-operative banks.

"This set of amendments to the Banking Regulations (Amendments) Bill is being brought to completely protect the interests of depositors. There are only a few amendments, but they are coming in with a singular objective of protecting the depositors," Sitharaman said.

The Union Finance Minister further added that the government wants to bring in "proper management and make sure they are professionally run."

"If at all we need to restructure any such co-operative banks then we need to be restructured without a moratorium period. By amending Section 45 we are able to give a quick recovery, quick payback, and also make sure the interests of the depositors are safeguarded," she said.

The Rajya Sabha passed the bill amid several Opposition members, including those from Congress, Samajwadi Party and others walking out over the issue of suspension of eight parliamentarians and the farm-related bills.

The Companies (Amendment) Bill, 2020, the National Forensic Sciences University Bill, 2020 and the Essential Commodities (Amendment) Bill, 2020 were the other bills passed in the House.