SOURCE – LIVE MINT
GS PAPER – 3
CONTEXT – Finance minister introduces Banking Regulation (Amendment) Bill in Lok Sabha. The Bill also replaces the Banking Regulation (Amendment) Ordinance, 2020 that was promulgated on June 26, 2020
- The law seeks to protect the interest of the depositors by bringing co-operative banks under the regulatory framework of Reserve Bank of India (RBI).
- RBI will be able undertake a scheme of amalgamation of a bank without placing it under moratorium.
- Further amendments were proposed to be made in section 45 of the Act to enable the Reserve Bank of India to make a scheme to protect the interests of the public, the banking system, depositors or to secure the banking company’s proper management, without first making an order of moratorium so as to avoid disruptions in the financial system
- The central bank’s banking regulations will be applicable to cooperative banks as well, which is expected to enhance the oversight of the co-operative banking sector
- Cooperative banks will be allowed to raise money via public issue and private placement, of equity or preference shares as well as unsecured debentures, with the central’s bank’s nod.
- The Bill states that, co-operative banks cannot employ person as Chairman, who is insolvent or has been convicted of a crime involving moral turpitude