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Banking Regulation Act, 1949
Why is it in news?
- The Lok Sabha passed an amendment to the Banking Regulation Act, 1949 in September 2020.
- The amendment will bring cooperative banks under the direct supervision of the RBI.
- It will also bring cooperative banks under some of the same governance norms as commercial banks.
As per the Proposed Amendments
- Administrative matters would continue to be under the Registrar, Cooperative.
- Cooperative banks would be regulated under the RBI’s banking guidelines.
- Their auditing would also be done as per RBI's norms.
- Qualifications would be laid down for appointments, including that of Chief Executive Officers.
- Prior permission from the RBI would be required for the appointment of key positions.
- The regulator would deal with issues such as loan waivers.
- The RBI would also have powers to supersede the board of any cooperative bank in financial distress.
Currently:
- Cooperative banks are governed by dual regulations- state cooperative bodies and the RBI.
- While financial supervision comes under the ambit of the banking regulator, appointments are mostly looked after by the state bodies.
Background:
- According to an RBI report, there were 1,500 plus urban cooperative banks as on 31 March 2018.
- It has more than 8.6 crore depositors, Rs 5 lakh crore deposits and 1,540 multi-state, urban and other cooperative banks.
- The Amendments came In the wake of the recent Punjab & Maharashtra Cooperative (PMC) Bank crisis.