{"id":16987,"date":"2020-09-28T14:04:17","date_gmt":"2020-09-28T08:34:17","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=16987"},"modified":"2020-09-28T15:13:37","modified_gmt":"2020-09-28T09:43:37","slug":"banking-regulation-amendment-bill-2020-passed-by-lok-sabha","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/banking-regulation-amendment-bill-2020-passed-by-lok-sabha\/","title":{"rendered":"An Outlook on Banking Regulation (Amendment) Bill, 2020 Passed by Lok Sabha"},"content":{"rendered":"\n<p class=\"has-drop-cap\">After being introduced on September 14, 2020, Banking Regulation (Amendment) Bill, 2020 has finally enacted by the lower house of the parliament. This new amended act regulates the functioning of the bank and covers the several aspects such as management, licensing, and operation. The bill supersedes the Banking Regulation Amendment Ordinance, 2020 that was released on June 26 this year in Lok Sabha. The current bill amends the Banking regulation Act, 1949. <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"811\" height=\"374\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-110.png\" alt=\"Banking Regulation (Amendment) Bill, 2020 Passed by Lok Sabha\" class=\"wp-image-16988\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-110.png 811w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-110-300x138.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-110-768x354.png 768w\" sizes=\"(max-width: 811px) 100vw, 811px\" \/><\/figure><\/div>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/lok-sabha-passes-companies-amendment-bill-2020\/\">Lok Sabha passes Companies (Amendment) Bill, 2020<\/a><\/mark><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/banking-regulation-amendment-bill-2020-passed-by-lok-sabha\/#Power_to_make_a_Scheme_for_Amalgamation_or_Reconstruction_without_Imposing_Moratorium\" >Power to make a Scheme for Amalgamation or Reconstruction\nwithout Imposing Moratorium<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/banking-regulation-amendment-bill-2020-passed-by-lok-sabha\/#Issuance_of_Securities_and_Shares_by_Co-operative_Banks\" >Issuance of Securities and Shares\nby Co-operative Banks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/banking-regulation-amendment-bill-2020-passed-by-lok-sabha\/#Management_Qualification\" >Management Qualification<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/banking-regulation-amendment-bill-2020-passed-by-lok-sabha\/#Exempting_Certain_Provisions\" >Exempting Certain Provisions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/banking-regulation-amendment-bill-2020-passed-by-lok-sabha\/#Restructuring_of_Board_of_Directors\" >Restructuring of Board of\nDirectors:&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/banking-regulation-amendment-bill-2020-passed-by-lok-sabha\/#Removal_of_Certain_Provisions\" >Removal of Certain Provisions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/banking-regulation-amendment-bill-2020-passed-by-lok-sabha\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Power_to_make_a_Scheme_for_Amalgamation_or_Reconstruction_without_Imposing_Moratorium\"><\/span>Power to make a Scheme for Amalgamation or Reconstruction\nwithout Imposing Moratorium<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under\nthis Act, after imposing a moratorium on a bank, the Reserve Bank of India outlines\na scheme for amalgamation or reconstructions of banks to safeguard its\nmanagement or in the interest of the general public, depositors, or the banking\nsystem. <\/p>\n\n\n\n<p>Furthermore,\nno statutory action will be taken against the banks placed under moratorium.\nHowever, during such a period banks will be not able to discharge any\nliabilities. The bill will confer the right to the RBI to launch a scheme for\namalgamation or reconstruction without placing the bank under moratorium. In\naddition to the existing stipulates, the bank under a moratorium shall not be\neligible to confer any credit or deploy capital in credit instruments.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issuance_of_Securities_and_Shares_by_Co-operative_Banks\"><\/span>Issuance of Securities and Shares\nby Co-operative Banks<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nBill further states that the co-operative bank might issue special shares,\nequity, or preference on face value or to an individual belong to the area of\noperation or its members at a specified premium. Moreover, the bank can also\nissue bonds and debentures including other securities with maturity of ten or\nmore years to such individuals. Such issuance will be done under the prescribed\nstipulates mentioned by the RBI.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Management_Qualification\"><\/span>Management Qualification<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the Banking Regulation Amendment Bill, the co-operative banks are no longer eligible to appoint a person as a chairman with a criminal background or have been found guilty of committing a crime including moral turpitude. If the banks fail to comply with such a provision then RBI may step in and take the necessary action. Moreover, the bill also outlines a few stipulates in regards to the minimum qualification of the members of BOD. It is now compulsory that 51% of the member in the BOD possess adequate knowledge or expertise in areas such as banking, accountancy, law, or economics. Any failure in this regard can push the banks to reconstitute its Board or enforce authority to replace the concerned members with suitable persons.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exempting_Certain_Provisions\"><\/span>Exempting Certain Provisions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nBanking Regulation (Amendment) Bill states that RBI reserves the right of\nexempting certain provisions of the Act for the cooperative bank or a class of\ncooperative banks via notification. These provisions are related to the\nqualification of the BOD, employment, and the appointment of a chairman.\nStipulates for the exemption and period will be specified by the Reserve Bank\nof India.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Restructuring_of_Board_of_Directors\"><\/span>Restructuring of Board of\nDirectors:&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nAct states that the Reserve Bank of India has the authorization to supersede\nthe BOD of the multi-state co-operative bank under certain conditions for up to\n5 years. RBI could take such an action to safeguard the interest of the\ndepositors and the general public. In addition to that, the bill also permits\nthe RBI to confront the state authority to obtain reasonable comment for\nsuperseding the BOD of the co-operative bank registered under the Registrar of\nCo-operative Societies of a state.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Removal_of_Certain_Provisions\"><\/span>Removal of Certain Provisions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The bill has removed certain provisions related to the limitation imposed on the co-operative bank from granting loans on the security of its shares. Moreover, it also prevents these banks from disbursing unsecured credit to its directors and to the privately held entities where the director or chairman of the company is an interested party. The Act also laid down some stipulations when unsecured loans may be conferred and specific how credit may be reported to the <em><strong>Reserve Bank of India<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Reserve_Bank_of_India\"><em><strong>[1]<\/strong><\/em><\/a><\/sup>. The new bill has got relieved of such a provision.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">List of Exclusions<\/h3>\n\n\n\n<p>The\nAct doesn\u2019t cover certain co-operatives societies such as co-operative land\nmortgage banks and primary agricultural credit societies. As per the bill, the\nAct does not apply to:-<\/p>\n\n\n\n<ul><li><em>Primary agricultural credit societies<\/em><\/li><li><em>Co-operative societies dealing with long term financing for agricultural development.<\/em>&nbsp;<\/li><\/ul>\n\n\n\n<p>Moreover,\nsuch societies cannot use or add the terms \u2018bank\u2019, \u2018banker\u2019, or \u2018banking\u2019 in\ntheir existing name. Such conditions are also applicable to the companies\nrelated to these banks.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Banking Regulation Amendment Bill seems to give better authority to RBI to control the working of co-operative banks. The arrival of this bill has changed a lot of provisions for these banks, be it a matter of appointing a chairman or disbursing credit under moratorium. It seems that after the deployment of the new provisions, these banks will more likely to offer legitimate services to the customers without bypassing any of the bylaws.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/rbi-has-expert-committee-report-on-resolution-framework-for-covid-19-related-stress\/\">RBI has Expert Committee Report on Resolution Framework for COVID-19 Related Stress<\/a><\/mark><\/p>\n\n\n<a href=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/Banking-Regulation-Bill-2020-as-passed-by-LS.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">Banking-Regulation-Bill-2020-as-passed-by-LS<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>After being introduced on September 14, 2020, Banking Regulation (Amendment) Bill, 2020 has finally enacted by the lower house of the parliament. This new amended act regulates the functioning of the bank and covers the several aspects such as management, licensing, and operation. The bill supersedes the Banking Regulation Amendment Ordinance, 2020 that was released [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":17027,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[153],"tags":[1044],"acf":{"service_id":"220"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":5515,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16987"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=16987"}],"version-history":[{"count":9,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16987\/revisions"}],"predecessor-version":[{"id":17037,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16987\/revisions\/17037"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/17027"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=16987"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=16987"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=16987"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}