Context:

• In pursuance of the commitment to ensure safety of depositors across banks, the President has promulgated the Banking Regulation (Amendment) Ordinance, 2020.

• The Ordinance amends the Banking Regulation Act, 1949 as applicable to Cooperative Banks. What it intends to do?

• The Ordinance seeks to protect the interests of depositors and strengthen cooperative banks by improving governance and oversight by extending powers already available with RBI in respect of other banks to Co-operative Banks as well for sound banking regulation, and by ensuring professionalism and enabling their access to capital.

• The amendments do not affect existing powers of the State Registrars of Co-operative Societies under state co-operative laws.

• The amendments do not apply to Primary Agricultural Credit Societies (PACS) or co-operative societies whose primary object and principal business is longterm finance for agricultural development, and which do not use the word “bank” or “banker” or “banking” and do not act as drawees of cheques.

• The Ordinance also amends Section 45 of the Banking Regulation Act, to enable making of a scheme of reconstruction or amalgamation of a banking company for protecting the interest of the public, depositors and the banking system and for securing its proper management, even without making an order of moratorium, so as to avoid disruption of the financial system. Significance

• The move to bring these urban and multi-State coop. banks under the supervision of the RBI comes after several instances of fraud and serious financial irregularities, including the major scam at the Punjab and Maharashtra Co-operative (PMC) Bank.

* The RBI was forced to supercede the PMC Bank’s board and impose strict restrictions.

• The ordinance has been passed with a view to protect the depositors. With this, depositors will get more security