The Banking Regulation (Amendment) Bill 2020, a Bill to further amend the Banking Regulation Act, 1949 has certain goals as encapsulated in it. We are reproducing its Statement of objects and reasons.
The Banking Regulation Act, 1949 was enacted to consolidate and amend the law relating to banking. Part V of the said Act provides for the application of the Banking Regulation Act, 1949 to co-operative banks, subject to certain modifications specified in section 56 thereof.
Keeping in view the developments in the banking sector and regulation thereof overtime, it has become necessary to strengthen the provisions of the said Act as applicable to co-operative banks.
It is proposed to bring the co-operative banks on par with the developments in the banking sector through better management and proper regulation of co-operative banks with a view to ensure that the affairs of the co-operative banks are conducted in a manner that protects the interests of the depositors.
It is further proposed to strengthen the co-operative banks by increasing professionalism, enabling access to capital, improving governance and ensuring sound banking through the Reserve Bank of India.
In view of the above, it is decided to amend the Banking Regulation Act, 1949 by the Banking Regulation (Amendment) Bill, 2020, inter alia, to provide for the following:
(i) to amend section 3, so as to make the provisions of the said Act not applicable to—
(a) a primary agricultural credit society; or
(b) a co-operative society whose primary object and principal business is providing of long term finance for agricultural development,
if such society does not use as part of its name, or in connection with its business, the words “bank”, “banker” or “banking” and does not act as drawee of cheques;
(ii) to substitute clause (i) of section 56, so as to provide for the issue and regulation of paid-up share capital and securities by co-operative banks;
(iii) to amend clause (zaa) of section 56, so as to provide that in the case of a co-operative bank registered with the Registrar of Co-operative Societies of a State, the Reserve Bank shall consult the concerned State Government before issuing order for supersession of the board of directors under section 36AAA;
(iv) to omit certain clauses of section 56 as the other provisions of the Banking Regulation Act, 1949 would apply to co-operative banks;
(v) to make other consequential changes in section 56.
The Bill seeks to achieve the above objectives.