The Lok Sabha on September 16, passed Banking Regulation Bill, 2020 through voice vote. The bill replace it's corresponding ordinance which was promulgated in June.
The bill was presented by finance minister Nirmala Sitharaman with an objective to improve governance and protect the interest of the depositors and and bring the cooperative banks under the supervision of Reserve Bank of India
As the economic situation arising from the COVID-19 pandemic had increased the stress in both co-operative banks and banking companies, there was an immediate need for legislation in this regard. As Parliament was not in session, the Banking Regulation (Amendment) Ordinance, 2020 was promulgated by the President of India
The Present Bill amended the Banking Regulation Act, 1949. The Act seeks to regulates the functioning of banks and provides details on various aspects such as licensing, management, and operations of banks.
(a)A primary agricultural credit society;
(b)A co-operative society whose primary object and principal business is providing of long term finance for agricultural development,
Further, these societies are not allowed to use the words ‘bank’, ‘banker’ or ‘banking’ in their name or in connection with their business, or act as an entity that clears cheques.
4.Bill also states the qualification criteria for management of cooperative banks.
RBI has power to exempt cooperative banks from certain provision of the act through notification.