Govt introduces Banking Regulation Bill in Lok Sabha

New Delhi: The government on Monday introduced a bill in the Lok Sabha to amend the Banking Regulation Act to bring cooperative banks under the supervision of the Reserve Bank of India (RBI) in order to protect the interests of depositors.

Finance Minister Nirmala Sitharaman introduced the Banking Regulation (Amendment) Bill, which will replace an ordinance that was promulgated in June amid the coronavirus pandemic.

Opposition members, including Shashi Tharoor of the Congress and Saugata Roy of the Trinamool Congress, opposed the bill, accusing the Centre of encroaching on the rights of states.

Rejecting the charge, Sitharaman asserted that state cooperative laws are not being touched and that the proposed law seeks to bring these banks with same regulations that are applicable on other banks.

It is applicable to those cooperative banks which deal with "bank, banker and banking," she said, adding that as many as 277 urban cooperative banks have reported losses. Tharoor said the bill is an encroachment on federalism, while Roy claimed it attacks "state rights".

Ruling party members also opposed Roy's personal remarks targeting Sitharaman, with Parliamentary Affairs Minister Pralhad Joshi demanding an apology.

Speaker Om Birla said Roy's comments have been expunged.

Sitharaman withdrew a bill to the amend the Act that was introduced in the Lok Sabha in March before introducing the new bill with certain changes on Monday.

"I wish to move for leave to withdraw a bill further to amend the Banking Regulation Act 1949," she said. The bill that was introduced in March could not be passed and in June, the ordinance was promulgated.

"Yes, we did come up with the Bill (in March 2020) and subsequently an ordinance was passed because the session was not on to consider the bill, discuss the bill and then pass it... ordinance became a necessity," Sitharaman said.

"We were going through pandemic and there was stress in several cooperative banks and as a result of which it was felt that till we clear the bill there should not have a situation where many of the cooperative banks should suffer and therefore we brought in an ordinance in place with the essential features of the bill which was tabled in the house in March," she noted.