President Promulgates Banking Regulation (Amendment) Ordinance, 2020
·
Amendments to Ensure better Management
& Sound Regulation of Cooperative Banks
·
Facilitates making of Reconstruction/Amalgamation
Scheme in the Interest of Public/Depositors/Banking/Proper Banking Company
Management
In pursuance of the commitment to ensure safety of depositors
across banks, the President has promulgated the Banking Regulation (Amendment) Ordinance,
2020 on 26 June 2020.
The Ordinance amends the Banking Regulation Act, 1949 as applicable
to Cooperative Banks. The Ordinance 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
as well 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. The amendments
do 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.
The Ordinance also amends Section 45 of the Banking Regulation
Act, to enable 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.