Bill introduced to amend banking laws, protect small depositors

Introducing the Banking Regulation (Amendment) Bill, Finance Minister Nirmala Sitharaman said the bill is the “need of the hour” to avoid a PMC Bank-like crisis in the future.

Noting that the happenings at the PMC Bank had “unfortunately” put a lot of small depositors in difficulty, Sitharaman said there were demands that the government should do something about it.

The proposed law seeks to enforce banking regulation guidelines of the RBI in cooperative banks while administrative issues will still be guided by the Registrar of Cooperative.

The Bill proposes to bring cooperative banks on par with developments in the banking sector through better management and proper regulation of cooperative banks with a view to ensure that affairs of cooperative banks are conducted in a manner that protects the interest of depositors, it said.

It further proposes to strengthen cooperative banks by increasing professionalism, enabling access to capital, improving governance and ensuring sound banking through the RBI.

“Keeping in view developments in the banking sector and regulation thereof over time, it has become necessary to strengthen provisions of the said Act as applicable to cooperative banks,” said the Statement of Objects and Reasons of the Bill.

The Bill was introduced in the Lok Sabha amid din with Sitharaman saying that if the opposition wants to deny the small depositors their rights then “it is a shame”.