New Delhi, Aug 13: Finance Minister Jaswant Singh on Wednesday introduced in the Lok Sabha a bill to amend the Banking Regulation Act of 1949 to strengthen regulatory powers of the Reserve Bank of India. The bill provides for enhancing the minimum capital level of banking cooperative societies at Rs 25 lakh, banking companies at Rs 100 crore and local area banks at Rs five crore and foreign banks at Rs 100 crore.

It also empowers RBI to remove the Chairman of the Board of Directors of any banking cooperative society, if in its opinion he is not a fit and proper person to hold that post.
The bill allows banking companies to issue irredeemable preference shares or redeemable preference shares as per the international practice.

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In the Statement for Objects and Reasons for the Bill, Singh said the Act had been in force for more than four decades.

While the banks have started operating in de-regulated and liberalised environment, regulation of cooperative banks continued to be given a separate treatment by restricting the applicablity of the provisions of the Act, he said. Bureau Report