New Delhi: In pursuance of the commitment to ensure the safety of depositors across banks, President Ram Nath Kovid on Saturday (June 27) promulgated the Banking Regulation (Amendment) Ordinance, 2020.
The Ordinance amends the Banking Regulation Act, 1949 as applicable to Cooperative Banks.
According to it, the ordinance seeks to protect the interests of depositors and strengthen cooperative banks by improving governance and oversight by extending powers already available with RBI in respect of other banks to co-operative Banks as well for sound banking regulation, and by ensuring professionalism and enabling their access to capital.
The amendments do not affect existing powers of the State Registrars of Co-operative Societies under state co-operative laws. The amendments do not apply to Primary Agricultural Credit Societies (PACS) or co-operative societies whose primary object and principal business is long-term finance for agricultural development, and which do not use the word “bank” or “banker” or “banking” and do not act as drawees of cheques.
The Ordinance also amends Section 45 of the Banking Regulation Act, to enable making of a scheme of reconstruction or amalgamation of a banking company for protecting the interest of the public, depositors and the banking system and for securing its proper management, even without making an order of moratorium, so as to avoid disruption of the financial system.
The Union Cabinet, earlier this week on Wednesday decided to bring all cooperative banks under the Reserve Bank of India. Union Information and Broadcasting Minister Prakash Javadekar said during the virtual press meet after the meeting that depositor will be assured his money is safe. “Government banks, including 1,482 urban cooperative banks and 58 multi-state cooperative banks, are now being brought under supervisory powers of Reserve Bank of India (RBI).”
President Promulgates Banking Regulation (Amendment) Ordinance for better mgmt. & sound regulation of co-op banks and facilitates making of reconstruction/amalgamation scheme in interest of public/depositors/banking/proper banking company mgmt.
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— Ministry of Finance (@FinMinIndia) June 27, 2020