The Lok Sabha on Wednesday passed the Banking Regulation (Amendment) Bill bringing the Urban Co-Operative Banks under the supervision of the Reserve Bank of India to protect the interest of depositors. The Bill was supported by many opposition parties including Shiv Sena while the Congress and the Trinamool Congress objected that the Bill intended to usurp the State’s power in the co-operative sector.
Replying to opposition, Finance Minister Nirmala Sitharaman said that the bill is only intended to protect the depositors and only apply to the banking operation of the Co-operative Banks and not applicable to primary agricultural credit societies.
“This is not the first time RBI intervening into the banking operations co-operative banks. From 1965, RBI issued many circulars on this regard. Many urban co-operative banks are facing serious problems like NPA and many wound up losing money of the depositors. Those functioning as Banks must work as Commercial Banks and RBI rules must apply on them,” she said. She also clarified that co-operative banks engaged in land mortgage will come under the RBI supervision since it is a banking activity.