New Delhi, Sep 16 (UNI) Union Finance Minister Nirmala Sitharaman on Wednesday assured the Lok Sabha that interest of depositors have to be protected, and stressed that the Banking Regulation Bill does not encroach upon the powers of the state.
Responding to the debate on the Banking Regulation (Amendment) Bill, 2020, Ms Sitharaman said, ' We want to regulate banking activity, within our powers and will not interfere into federalism.'
She said consultation with states is required only when legislating on concurrent list item, but this Bill comes under the union legislative power. So consultation is not necessary, she maintained.
The Bill, which further amends the Banking Regulation Act, 1949, was passed with voice vote.
The minister said, 'I am not not undermining co-operative banks but need to regulate these banks. Regulation will make these co-operative banks more professional.'
She said in the past two decades, many co-operative banks were de-licenced and went into liquidation but not a single commercial bank, under Banking Regulation Act, has gone into liquidation during the same period.
She said financial health of these co-operative banks had become grim and many such banks were unable to even meet the minimum regulatory capital requirements.
Ms Sitharaman said there was an increase in gross non-performing asset between 2018-19 to 2019-2020 in co-operative banks banks, so the ordinance has to be brought in.
The Finance Minister said in the past two years, depositors of co-operative and small banks have been put to hardships, the amendment is being brought to protect the interest of depositors.
She emphasised that the protection of depositors of crucial importance and 'we don't want things hurting the depositors'.
The Minister said the co-operative banks are being brought under the RBI regulation for their reconstruction, if possible without any moratorium, to protect the interest of depositors.
She stressed that it will not touch primary agriculture credit societies or other co-operative societies, it only concerns the cooperatives involved banking operations.
Citing the preamble to the RBI Act, Ms Sitharaman said, '...describes its main functions as '...to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage'.
More UNI RSA 1953