The Indian Parliament has passed amendments on bill to the Banking Regulation Act as cooperative banks are covered under the supervision of Reserve Bank of India (RBI), a move aimed at protecting the interest of depositors. The Banking Regulation (Amendment) Bill 2020, which replaces an ordinance that was promulgated on June 26, was passed by a voice vote in Rajya Sabha. The amendment had got approval from Lok Sabha on September 16.  

The legislation also enables making of a scheme of reconstruction or amalgamation of a banking entity for protecting the interest of depositors without resorting to the moratorium that freezes withdrawals by depositors. The bill replaces an ordinance that was promulgated in pursuance of the commitment “to ensure the safety of depositors across banks” by the President on June 26.

The Finance Minister said that the amendments had been brought to protect the depositors’ interest completely. She clarifies this amendment is only for cooperative societies engaged in banking activities. “During the COVID period, many cooperative banks have come under stress. Their finances are being closely monitored by the regulator RBI,” Sitharaman said.

The upper house debated the bill amid several members boycotting proceedings till the suspension of eight MPs is revoked. Many of eight members of the Rajya Sabha were suspended on Monday after the government brought a motion in this regard which was passed by the house by voice vote.