Govt is amending Banking Regulation Act to benefit depositors: FM


New Delhi, Sep 16 (IANS): The government has brought amendments to the Banking Regulation Act, 1949 in order to protect the interests of the depositors, Union Finance Minister Nirmala Sitharaman said in Parliament on Wednesday.

The Finance Minister said the government is trying to bring amendments in order to protect the interest of depositors who in the last two years have been put to hardships.

The depositors in some unfortunate situations in the banks or cooperative societies, which are also operating as banks, are put to hardship, the Minister said while moving the Banking Regulation (Amendment) Bill, 2020 to amend the Banking Regulation Act, 1949 in the Lok Sabha.

She said the government had introduced the Bill so that the depositors interests will be taken care of. But, the Minister said, unfortunately, during the Budget session the government could not have this Bill passed and had to bring in an ordinance. Sitharaman said the ordinance was brought in only because the financial health of many of these cooperatives, which were also performing as banks, was becoming very bad.

She informed the Lower House that the financial condition of 277 urban cooperative banks was very delicate and they were reporting losses, while 105 such banks were unable to fulfil their minimum regulatory capital requirement.

She said a total of 47 urban cooperative societies had a negative net worth and 328 urban cooperative banks were having more than 15 per cent gross NPA (Non Performing Assets).

Despite the Covid-19 pandemic, Sitharaman said the gross NPA ratio of urban cooperative banks increased from 7.27 in March 2019 to over 10 per cent in March 2020. Therefore, the Minister said, the government had to bring an ordinance in the interest of the depositors and now that ordinance has to be replaced.

She said her Ministry has brought in amendments in Section 3, Section 45 and Section 56. By amending Section 3 and 56, the government is making provisions applicable to banking companies applicable to cooperative banks also so that cooperative banks are equally subject to better governance and sound banking regulations through the Reserve Bank of India (RBI). Section 45 is being amended because it will enable the RBI to make a theme of reconstruction and amalgamation, she said.

Giving the example of the recent Yes Bank reconstitution scheme, she said it is to protect the interest of the public depositors without making the bank undergo a moratorium period. She also gave an example of BMC bank in which the depositors could not get a resolution till now.

The minister clarified that the Bill will not be applicable to the Primary Agricultural Credit Society and will also not be applicable to the cooperative society whose primary business is providing long term finance for agricultural development. "This will be applicable only on those who bank, banker and banking business in cooperative society."

Mentioning that her government is not doing anything new, the Minister said Section 3 and 56 have also been amended earlier in 1965, 1984, 1987, 1989 and 2012.

On the first day of the session, Sitharaman had withdrawn the Bill saying "it is being withdrawn to add a few new things giving the Reserve Bank of India a chance to be able to restructure distressed cooperative banks, which are in serious need". The Bill was not passed by Parliament during the Budget Session and subsequently an ordinance was issued.

  

Top Stories

Comment on this article

  • Sachidananda Shetty, Mundkur/Dubai

    Thu, Sep 17 2020

    Yes we need to change Act to protect the Bank Customer especially Depositors....
    And same time make such provision to punish those individual who makes willful mistakes too

    All most all Banks....give hardship for common public...whereas big fish makes big waves and goes off

    DisAgree Agree [5] Reply Report Abuse

  • Eddison Dsouza, mangalore

    Thu, Sep 17 2020

    Govt is amending Banking Regulation Act to benefit depositors: FM - Beware, reality is gonna be otherwise

    DisAgree [1] Agree [9] Reply Report Abuse

  • Shameer, Riyadh

    Wed, Sep 16 2020

    There you go....NPAs of Urban Co-op Banks is already more than 15%. I can imagine what would be the situation of nationalized and private banks.

    But how does it matter. At the end of the day BJP will waive the NPA's. Indirectly public tax is channeled in a systematic manner to favourite corporates.

    It is an organised fraud with help of government.

    DisAgree [4] Agree [24] Reply Report Abuse


LEAVE A COMMENT

Title : Govt is amending Banking Regulation Act to benefit depositors: FM


 
 
 
 

 
You have 2000 characters left.

Disclaimer:

Please write your correct name and email address. Kindly do not post any personal, abusive, defamatory, infringing, obscene, indecent, discriminatory or unlawful or similar comments. Daijiworld.com will not be responsible for any defamatory message posted under this article.

Please note that sending false messages to insult, defame, intimidate, mislead or deceive people or to intentionally cause public disorder is punishable under law. It is obligatory on Daijiworld to provide the IP address and other details of senders of such comments, to the authority concerned upon request.

Hence, sending offensive comments using daijiworld will be purely at your own risk, and in no way will Daijiworld.com be held responsible.


Security Validation

Enter the characters in the image