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Bill to bring cooperative banks under RBI's supervision passed in Parliament

Saransh Pandey

Intern
  • September 22, 2020
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    Rajya Sabha passed The Banking Regulation (Amendment) Bill, 2020 by a voice vote, new amendment will replace an ordinance that came into effect on June 26

In order to bring cooperative banks under the supervision of the RBI, Parliament has passed amendments to the Banking Regulation Act. The step is aimed at protecting the interest of depositors. Rajya Sabha passed the The Banking Regulation (Amendment) Bill, 2020 by a voice vote, new amendment will replace an ordinance that came into effect on June 26. Parliament gave approval to the amendment on September 16. 

The bill which comes after the PMC Bank scam is aimed at strengthening the cooperative banks by increasing their professionalism, enabling access to capital, improving governance, and ensuring sound banking through the RBI. During a short debate on the bill in Rajya Sabha, Finance Minister Nirmala Sitharaman the main objective of the amendments is to completely protect the interest of depositors.  

She clarified that the amendment will be only applicable to cooperative societies that are engaged in banking activities. She said that due to the COVID pandemic, many cooperative banks have come under stress and their finances are being closely monitored by the regulator RBI. 

Nirmala Sitharaman said that the amendments were justified because the government was able to quickly resolve the troubled Yes Bank as it was governed by commercial bank rules, but the PMC Bank crisis issue resolution is yet to be found. 

Parliament debated about the bill despite the fact that several members boycotted the proceedings till the suspension of eight MPs is revoked. As many as eight members of the Rajya Sabha were suspended on Monday after the government brought a motion in this regard which was passed by the House by voice vote. 

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