ANI
16 Sep 2020, 17:57 GMT+10
New Delhi [India], September 16 (ANI): 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 (Amendment) Bill 2020 for passage of the House, Finance Minister Nirmala Sitharaman said the legislation had been brought to protect the interest of depositors.
The bill will replace an ordinance brought earlier by the government.
"For the last two years, depositors of cooperative banks and small banks are facing problems. We are trying to bring this amendment in order to protect the depositors. Because these banks have fallen into hard days requiring therefore the regulator to bring a moratorium and to solve the problem seems to consume all the time. During the budget session in March, we introduced this bill in order to have the amendments brought in so that depositors' interest will be taken care of. But unfortunately, during the budget session, we could not have this bill passed," Sitharaman said.
She said the government had to go for an ordinance because the financial health of many of the cooperative societies, which are also performing as banks, "was becoming very delicate".
"The financial state of affairs of 277 urban cooperative banks is weak and they are reporting loss. 105 cooperative banks are unable to meet the minimum regulatory capital requirement. 47 banks have net worth is negative. 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.
The amendments entail making provisions applicable on cooperative banks which apply on commercial banks so that the former is equally subjected to better governance and sound banking regulations through the RBI.
The minister said "amendments to section 45 will enable the RBI to make a scheme of reconstruction and amalgamation, for example, the way in which Yes Bank reconstruction happened to protect the interest of depositors".
Participating in the debate, Congress leader Manish Tewari opposed the manner in which the government had brought an ordinance. (ANI)Get a daily dose of Mexico Star news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Mexico Star.
More InformationWASHINGTON, D.C.: Filmmaker Peter Jackson's lifelong fascination with the extinct giant New Zealand flightless bird called the moa...
NEW DELHI, India: Birkenstock is stepping up its efforts to protect its iconic sandals in India, as local legal representatives conducted...
Tel Aviv [Israel], July 13 (ANI/TPS): In response to reports that negotiations in Qatar have stalled, and following an unnamed Israeli...
Kaithal (Haryana) [India], July 12 (ANI): Haryana Chief Minister Nayab Singh Saini said that under PM Surya Ghar Muft Bijli Yojana,...
Kabul [Afghanistan], July 12 (ANI): The United Nations has warned of a worsening humanitarian crisis as up to three million Afghan...
by Hummam Sheikh Ali QASTAL MAAF, Syria, July 12 (Xinhua) -- Rifaat Ismail's shoes sink into the ash where olive groves once flourished....
DUBAI, U.A.E.: A cargo ship flagged under Liberia, known as the Eternity C, sank in the Red Sea following an attack executed by Yemen's...
WASHINGTON, D.C.: The Trump administration has started sending some weapons to Ukraine again, just a week after the Pentagon told officials...
ECAULT BEACH, France: On clear days, the white cliffs of the United Kingdom, are visible from northern France, where men, women, and...
ATLANTA, Georgia: The United States is facing its worst measles outbreak in more than three decades, with 1,288 confirmed cases so...
In the past month alone, 23 Israeli soldiers have been killed in Gaza—three more than the number of remaining living hostages held...
LONDON, U.K.: At least 13 people are believed to have taken their own lives as a result of the U.K.'s Post Office scandal, in which...