Banking Regulation (Amendment) Bill, 2020
The Banking Regulation (Amendment) Bill, 2020 which is an amendment to the Banking Regulations act 1949, was passed in Parliament. The Bill replaces the Banking Regulation (Amendment) Ordinance, 2020 that was promulgated on June 26, 2020.
key provisions of the Bill
- The Bill provides power to RBI so as to initiate scheme for reconstruction or amalgamation without imposing any moratorium.
- The Bill provides that no person will have the power to demand payment for surrendering shares that have been issued to him by a co-operative bank.
- As per the Bill, a co-operative bank will not be entitled to withdraw or reduce its share capital unless specified by Reserve bank of India (RBI)
- 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.
- As per the Bill, RBI can exempt a cooperative bank or a class of cooperative banks from certain provisions of the Act through notification.
Restrictions under the Bill
- The Bill will not be applicable to,
- Primary agricultural credit societies and
- Co-operative societies whose primary business is long term financing for agricultural development.
- Co-operative societies cannot use words ‘bank’, ‘banker’ or ‘banking’ in their name.
Banking Regulation Act, 1949
The Banking Regulation Act, 1949 is a legislation to regulates all banking firms in India. It was passed in 1949 and came into force from 16 March 1949. It sets the framework under which commercial banking in India is supervised and regulated. It also supplements the Companies Act, 1956. It excludes Primary Agricultural Credit Society and cooperative land mortgage banks from its provisions. The act empowers the RBI to license banks, regulate the operations and to supervise the appointment of the boards and management.