On Tuesday parliament passed amendments to the Banking Regulation Act to bring cooperative banks under the supervision of the RBI.
The Banking Regulation (Amendment) Bill, 2020, which replaces an ordinance that was promulgated on June 26, was passed by a voice vote in Rajya Sabha, and the amendment had got approval from Lok Sabha on September 16.
Sitharaman said that “During the COVID period many cooperative banks have come under stress. Their finances are being closely monitored by the regulator RBI.”
The bill, which comes in the backdrop of the PMC Bank scam, seeks to strengthen cooperative banks by increasing their professionalism, enabling access to capital, improving governance, and ensuring sound banking via the RBI.
Finance Minister Nirmala Sitharaman replying to a short debate on the bill in Rajya Sabha that “the amendments have been brought to completely protect the interest of depositors. She clarifies this amendment is only for cooperative societies engaged in banking activities.”
The minister also said to justify the need for the amendments that “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.”