The Banking Regulations Bill became law with the Lok Sabha passing the bill to bring cooperative banks under the supervision of the Reserve Bank of India. Following the passage, if the bill, Finance Minister Nirmala Sitharaman said for the last two years, depositors of cooperative banks and small banks are facing problems and the government is trying to bring this amendment in order to protect the depositors. The bill replaces the Banking Regulation (Amendment) Ordinance, 2020. The ordinance had brought 1482 urban and 58 multi-state cooperative banks under the supervision of the central bank. Among other things, the bill allows the central bank to initiate a scheme for reconstruction or amalgamation of a bank without placing it under a moratorium, the cooperative banks will be allowed to issue equity, preference, or special shares on face value or at a premium to its members, or to any other person residing within their area of operations and no person will be entitled to demand payment towards surrender of shares issued to him by a cooperative bank, and the regulator may exempt a cooperative bank or a class of cooperative banks from certain provisions of the Act through notification. These provisions are related to employment, the qualification of the board of directors and, the appointment of a chairman. The bill will not be applicable to PACS and cooperative societies whose principal business is long term financing for agricultural development.
