Parliament on Tuesday passed amendments to the Banking Regulation Act to bring cooperative banks under the supervision of the 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 bill, which comes in the backdrop of the PMC Bank scam, seeks to strengthen cooperative banks by increasing their professionalism, enabling access to capital, improving governance and ensuring sound banking through the RBI.

Replying to a short debate on the bill in Rajya Sabha, Finance Minister Nirmala Sitharaman said the amendments have been brought to completely protect the interest of depositors. 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. Justifying the need for the amendments, the minister said the government was able to quickly resolve the troubled Yes Bank as it was governed by commercial bank rules, but the resolution to the PMC Bank crisis is yet to be found.

The upper house debated the bill amid several members boycotting proceedings till the suspension of eight MPs is revoked. As many as 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.