Context: 

The Union Finance Minister proposed certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act to improve bank governance and enhance investors’ protection. 

Related Announcements by Finance Minister:

• To reduce the cost of compliance, financial sector regulators will carry out a comprehensive review of existing regulations and consider suggestions from public and regulated entities.
• To build the capacity of functionaries and professionals in the securities market, SEBI will be empowered to develop, regulate, maintain and enforce norms and standards for education in the National Institute of Securities Markets and to recognise award of degrees, diplomas and certificates.
• Expansion of scope of documents available in Digilocker for individuals.
• Modification of the definition of ‘strategic disinvestment’.
• Allowing carry forward of accumulated losses and unabsorbed depreciation allowance in the case of amalgamation of one or more banking company with any other banking institution or a company subsequent to a strategic disinvestment, if such amalgamation takes place within 5 years of strategic disinvestment.

Additional Information 

About Banking Regulation Act:

• This act was originally enacted as Banking Companies Act, 1949 on 16 March 1949. From 1st March, 1966, it was renamed as Banking Regulation Act, 1949.
• The act was initially enacted to regulate the banking companies. In 1965, it was amended and made applicable to cooperative banks also
• The act extends to the entire nation including Jammu and Kashmir.
• The act gives following powers to Reserve Bank of India (RBI)
  • To supervise the appointment of boards and management of the banks
  • To lay down instructions for audits
  • To control mergers, liquidation and moratorium
  • To provide directives on banking policy
  • Impose penalty
  • To regulate operations of the bank

About Reserve Bank of India Act, 1934:

• It was enacted in 1934 to constitute the Reserve Bank of India. It provides a framework for the supervision of banks and other related matters.

• Few provisions of the Act

• • Section 3: Provides for the establishment of the Reserve Bank of India for taking over the management of the currency from the Central Government and for carrying on the business of banking in accordance with the provisions of this Act.
  • Section 4: Defines the capital of RBI which is Rs. five crore.
  • Section 7: Empowers the central government to issue directions in public interest from time to time to the bank in consultation with the RBI Governor. This section also provides power of superintendence and direction of the affairs and business of RBI to the Central Board of Directors.
  • Section 17: This section deals with the functioning of RBI.

News Source: The Hindu

DOWNLOAD PDF