Banking Regulation (Amendment) Act, 2020

By INSOL India - Editorial Team Posted On : October 29, 2020

On September 29, 2020, the Banking Regulation (Amendment) Act, 2020 (“BR Amendment Act”) has been enacted with a view to extend certain provisions of the Banking Regulation Act, 1949 (“BR Act”). By virtue of the BR Amendment Act, certain provisions of the BR Act which did not apply to co-operative banks have been made applicable to them, thus bringing their regulation in line with commercial banks. The RBI is now empowered to apply the ‘fit and proper’ criteria for determining appointment or removal of a chairperson of a co-operative bank and may also supersede the board of directors of a co-operative bank. In addition, co-operative banks may, with the prior approval of the RBI, raise share capital and other unsecured securities from the public. 
Importantly, the BR Amendment Act has amended section 45 of the BR Act, enabling the RBI to initiate a scheme of reconstruction or amalgamation of a bank even without imposing a moratorium. The BR Amendment Act has repealed the Banking Regulation (Amendment) Ordinance 2020.