Banking Regulation Amendment Bill, 2020 Introduced in Parliament
The new Banking Regulation Bill (Amendment Bill), 2020, is introduced on the first day of the monsoon session of Parliament. The bill was introduced by Finance Minister Nirmala Sitharaman and was withdrawn in March 2020, ahead of the Covid-19 pandemic. This amendment comes as the 277 urban cooperative banks reported losses during the COVID-19 pandemic.
Provisions of the bill:
- The bill will give the Reserve Bank of India (RBI) the power to restructure cooperative banks.
- The bill will consolidate cooperative banks under the umbrella of the RBI and will not affect state cooperative laws.
- In accordance with the bill, upon prior recommendation of RBI, cooperative banks will be able to raise money through public issues and private placements of equity, preferred shares and unsecured debentures.
- The bill recommended allowing the RBI to merge banks in order to remove the limit on withdrawals by depositors and facilitate the bank’s lending process.
- In general, the bill proposes to strengthen cooperative banks by increasing professionalism, improving governance, allowing access to capital and ensuring sound banking through RBI.