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Parliament passes bill to bring cooperative banks under supervision of RBI
Sep-23-2020

With an aim to protect the interest of depositors, the Parliament has passed the Banking Regulation (Amendment) Bill, 2020, to bring cooperative banks under the supervision of the Reserve Bank of India (RBI). The Bill, which replaces an ordinance that was promulgated on June 26, was passed by a voice vote in Rajya Sabha. 

The amendment had got approval from Lok Sabha on September 16. 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 through the RBI.

Finance Minister Nirmala Sitharaman said 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. She said during the coronavirus disease (Covid-19) pandemic many cooperative banks have come under stress and their finances are being closely monitored by the regulator RBI. Justifying the need for the amendments, she said 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.

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