InvestorQ : What are the highlights of the Banking Regulations Bill passed on Tuesday?
Neelam Naik made post

What are the highlights of the Banking Regulations Bill passed on Tuesday?

Answer
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Anu Biswas answered.
4 weeks ago


On Tuesday, the Upper House passed another important bill by voice vote. The Banking Regulation (Amendment) Bill 2020 will allow the RBI to initiate a scheme for amalgamation or reconstruction of a bank without placing it under moratorium.

This was on the cards because when banks are placed under moratorium, as in the case of Yes Bank, it results in a run on deposits and also a run on the stock price. We saw that happening in Yes Bank. On the other hand, Global Trust Bank was done more smoothly.

In addition, this amendment to the Banking Regulation Act will also bring cooperative banks increasingly under the regulatory ambit of the RBI. This should be positive for the depositors as a whole as it will ensure that cases like PMC Bank do not repeat in the future.

Nirmala Sitharaman affirmed in the Rajya Sabha that these amendments were intended to protect the interests of depositors. How it gets practically implemented and whether the RBI would be able to handle the expanded regulatory bandwidth, remains to be seen.