With the amendments, RBI can be in a position undertake a scheme of amalgamation of a financial institution with out putting it below moratorium. Earlier, if a financial institution was positioned below moratorium, it not solely restricted withdrawals by depositors, but additionally disrupted a financial institution’s lending operations.

The cooperative banks can even be allowed to lift cash by way of public difficulty and personal placement, of fairness or choice shares in addition to unsecured debentures, with the central’s financial institution’s nod. At the moment, entry to capital for cooperative banks is restricted.

In March, finance minister Nirmala Sitharaman tabled within the Lok Sabha the amendments to the Banking Regulation Act, 1949. Nonetheless, as a result of outbreak of the covid-19, the Parliament couldn’t approve the modifications. Thereafter, on June 26, an ordinance was promulgated.

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