Prez Kovind clears Ordinance that brings 1,540 co-operative banks under RBI supervision

President Ram Nath Kovind on Saturday promulgated the Banking Regulation (Amendment) Ordinance, 2020 passed by the Modi Cabinet earlier this week that brings Urban Co-operative Banks (UCBs) and Multi-State Co-operative Banks under the governance of the Reserve Bank of India (RBI).
 
The Ordinance amends the Banking Regulation Act, 1949 as applicable to Cooperative Banks. It seeks to protect the interests of depositors and strengthen cooperative banks by improving governance and oversight by extending powers already available with RBI in respect of other banks to Co-operative Banks.
 
The amendments, however, do not affect existing powers of the State Registrars of Co-operative Societies under state co-operative laws. The amendments do not apply to Primary Agricultural Credit Societies or co-operative societies whose primary object and principal business is long-term finance for agricultural development.
 
The Ordinance also amends Section 45 of the Banking Regulation Act to enable the making of a scheme of reconstruction or amalgamation of a banking company for protecting the interest of the public, depositors and the banking system and for securing its proper management, even without making an order of moratorium, so as to avoid disruption of the financial system.

READ | Union Cabinet Approves Ordinance To Bring 1,540 Co-operative Banks Under RBI Supervision

READ | RBI Officers Raise Concern Over Unified Cadre; Say Response To SSRC ‘less Than Lukewarm’

Javadekar's announcement

Union Minister Prakash Javadekar had on Wednesday announced that over 1,500 UCBs and multi-state co-operative banks will be brought under the supervisory power of the central bank.

"Government banks, including 1,482 urban cooperative banks and 58 multi-state cooperative banks, are now being brought under supervisory powers of Reserve Bank of India; RBI's powers as they apply to scheduled banks will apply for cooperative banks as well," Javadekar told reporters through video conferencing.

Assurance of safety to depositors

He said the to bring those banks under RBI's supervision will give an assurance to more than 8.6 crore depositors in these banks that their money amounting to Rs 4.84 lakh crore will stay safe. The Union Cabinet has approved an ordinance in this regard and with immediate effect from the date of President’s nod on the ordinance, the co-operative banks in the country will come under the RBI's supervision.

Prakash Javadekar further said that the Union Cabinet has approved a scheme "for interest subvention of 2% to Shishu loan category borrowers under Pradhan Mantri Mudra Yojana, outstanding as on March 31, 2020, for one year to eligible borrowers."

(PTI Photo)

READ | 'Yoga Keeps Body Fit, Mind Serene': President Kovind Extols Yoga Benefits Amid COVID-19

READ | PM Modi & Prez Kovind Condole Demise Of Former Delhi Police Commissioner Ved Marwah