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The Government introduced Banking Regulation (Amendment) Bill, 2020 to bring all the co-operative banks on par with the developments in the banking sector by way of better management and proper regulation of co-operative banks. This bill is brought to assure that the affairs of the co-operative banks are conducted in a manner that protects the interests of its depositors. Banking Regulation (Amendment) Bill, 2020 will further benefit the co-operative banks by increasing professionalism in banks, enabling access to capital, improving the governance and ensuring sound banking system through the Reserve Bank of India (RBI). According to Finance Minister Nirmala Sitharaman (Banking Regulation Amendment) Bill, 2020 is the need of the hour. This bill will avoid PMC Bank-like crisis in the future. Nirmala Sitharaman also said that the Punjab and Maharashtra Cooperative (PMC) Bank crisis affects a lot of small depositors in difficulty, which provoked the Government to take action. This bill is likely to be executed during the second leg of the Budget session; the session will end on April 3.
Table of Contents
The Union Cabinet on approved the amendment to the Banking Regulation Bill, 2020 for reasons cited:
Regardless of the objects contained in the National Bank for Agriculture and Rural Development Act, 1981, This Rule comes as a Substitution of new section for section 3.
This Act shall not apply to:
The following changes are made in Section 56 of the Banking Regulation Act, 1949:
The following sub-clauses shall be inserted in clause (a), after sub-clause (ii):
The clauses that are omitted in Section 12 are as follows:
The following changes are prescribed in Section 12(1), 12(1)(i), 12(ii):
No Co-operative Banks will make:
The purpose of the registrar of co-operative societies includes:
There are 1,540 co-operative banks with a depositor base of Rs.8.60 crore having total savings of about Rs 5 lakh crore. The RBI superseded PMC Bank’s Board after uncovering many irregularities. Cash withdrawals were capped at Rs. 1,000 per account for six months but subsequently relaxed to Rs. 50,000 as panic spread among depositors. The Finance Minister also said that the audit of such banks would be as per the central bank’s guidelines and recruitment for banks’ management will be based on specific qualifications. All the mentioned steps will be implemented by the Reserve Bank of India in a phased manner as mentioned in Banking Regulation (Amendment) Bill, 2020.
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