Finance minister Nirmala Sitharaman moves bill to amend Banking Regulation Act

The Lok Sabha on Wednesday took up for consideration a bill to address the potential disruptions in the financial system by providing for the Reserve Bank of India to prepare a scheme for reconstruction or amalgamation of the banking company without the necessity of first making an order of moratorium. Moving the Banking Regulation Bill 2020 for passage of the House, finance minister Nirmala Sitharaman said the legislation had been brought to protect the interest of depositors. 328 urban cooperative banks have more than 15 per cent gross NPA ratio,” she said. The minister said that in March 2020, the stress in cooperative banks increased due to pandemic and gross ratios of urban cooperative banks increased from 7.7 per cent in March 2019 to over 10 per cent in March 2020. “Therefore, it was felt that the ordinance should be brought in the interest of depositors.” She said the bill will not apply to a primary agricultural credit society or 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.