President Kovind promulgates ordinance to bring co-operative banks under RBI supervision

President Ram Nath Kovind has promulgated Banking Regulation (Amendment) Ordinance, 2020 to bring all urban cooperative banks and multi-state cooperative banks under supervision of RBI in order to protect interest of depositors.

Ordinance amends Banking Regulation Act, 1949 as applicable to cooperative banks, an official statement said on Saturday. " Ordinance seeks to protect interests of depositors and strengn cooperative banks by improving governance and oversight by extending powers alrey available with RBI in respect of or banks to Co-operative Banks as well for sound banking regulation, and by ensuring professionalism and enabling ir access to capital," it said.

amendments do t affect existing powers of State Registrars of Co-operative Societies under state co-operative laws, it ded. amendments also do t 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 t use words "bank", "banker" or "banking" and do t act as drawees of cheques, it said.

" Ordinance also amends Section 45 of Banking Regulation Act, to enable making of a scheme of reconstruction or amalgamation of a banking company for protecting interest of public, depositors and banking system and for securing its proper manment, even without making an order of moratorium, so as to avoid disruption of financial system," it said.

re are 1,482 urban cooperative banks and 58 multi-state cooperative banks having about 8.6 crore depositors with total savings deposit of about Rs 4.85 lakh crore. decision assumes significance in wake of scams in cooperative banks, including Punjab and Maharashtra Cooperative (PMC) Bank, affecting lakhs of customers who are facing difficulty in withdrawing ir money due to restrictions imposed by Reserve Bank of India (RBI).

RBI h placed regulatory curbs on PMC Bank on September 23, 2019, after finding out certain financial irregularities and misreporting of loans given to real estate developer HDIL.

Earlier this month, RBI h put restrictions on withdrawals from People's Co-operative Bank, Kanpur, Uttar Presh. Finance Minister Nirmala Sitharaman h introduced ' Banking Regulation (Amendment) Bill, 2020' in Lok Sabha on March 3, 2020, which is pending approval. proposed law sought to enforce banking regulation guidelines of RBI on cooperative banks. In her February 1 Budget speech, Sitharaman h proposed amendments to Banking Regulation Act with an aim to increasing professionalism and improving governance among cooperative banks.