On June 26, 2020, the President of India, Shri Ram Nath Kovind in exercising the powers conferred under clause (1) of article 123 of the Constitution has promulgated the Banking Regulation (Amendment) Ordinance, 2020 which will amend section 45, and 56 of Banking Regulation Act, 1949 as applicable to Cooperative Banks. This promulgation followed the Cabinet approval on June 24, 2020 regarding an ordinance to bring nearly 1,482 urban and 58 multi state cooperative banks under the Reserve Bank of India’s (RBI) supervision. Therefore, RBI’s power applied to scheduled banks, will now apply for cooperative banks as well.
- It was introduced in Lok Sabha (House of the People) on March 3, 2020.
- Its objective is to protect the interests of depositors and strengthen cooperative banks by improving governance 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.
-These will also 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.
-Currently, co-operative banks come under dual regulation of the RBI and the Registrar of Co-operative Societies (RCS). The above move has been taken after several instances of fraud and serious financial irregularities, including the major scam at the Punjab and Maharashtra Co-operative (PMC) Bank in 2019.
About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Formation– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).