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Bill to amend banking laws

On Tuesday, the Finance Minister Smt. Nirmala Sitharaman introduced a bill in Lok Sabha which seeks to protect the interest of small depositors by bringing cooperative banks under the RBI regulations. It seeks to impose banking regulation guidelines of the RBI in cooperative banks while the Registrar of Cooperative will still guide administrative issues.

The proposed law also seeks to bring cooperative banks on par with developments in the banking sector through better management and proper regulation of cooperative banks with a view to ensure that affairs of cooperative banks are conducted in a manner that protects the interest of depositors. Further, it is aimed at strengthening cooperative banks by increasing professionalism, enabling access to capital, improving governance and ensuring sound banking through the RBI.

The decision comes in the backdrop of a scam in the Punjab and Maharashtra Cooperative (PMC) Bank impacting customers who are facing difficulty in withdrawing their money due to restrictions imposed by the RBI. “Keeping in view developments in the banking sector and regulation thereof overtime, it has become necessary to strengthen provisions of the said Act as applicable to cooperative banks,” Statement of Objects and Reasons of the Bill noted.