Banking Regulation Act amended to allow RBI to regulate cooperative banks

India amended the Banking Regulation Act via a presidential decree, bringing cooperative banks under the regulatory purview of the Reserve Bank of India (RBI). The amendment enables mergers and restructuring without imposing a moratorium, facilitating smoother operations. \r

Cooperative banks can now raise funds through public issue or private placement with RBI approval, enhancing their access to capital. The move aims to safeguard depositors' interests, strengthen governance, and improve oversight, aligning cooperative banks with broader banking regulations. \r

Notably, primary farm credit societies remain unaffected. The decision follows the PMC Bank fraud, enhancing RBI's regulatory authority over cooperative banks. Earlier proposed amendments stalled due to the pandemic, but the recent decree implements crucial reforms, boosting cooperative banks' financial resilience and credibility.