Contents
- Sankalp Parva
- Banking Regulation (Amendment) Ordinance, 2020
SANKALP PARVA
Focus: GS-III Environment and Ecology
Why in news?
Prime Minister of India has called for planting at least five trees either in Office campus or wherever it is possible, to ensure clean and healthy environment of the country.
Details
Union Ministry of Culture has decided to celebrate Sankalp Parva wherein it expects all the Subordinate offices of the ministry, Academies, Attached Institutions, Affiliated Institutions to plant trees in its campus or at the surroundings wherever it is possible.
Ministry of Culture recommends to plants following five trees which represent the herbal heritage of our country:
- Bargad (Banyan tree)
- Awla (Gooseberry/Amla tree)
- Peepal tree (also known as Bodhi tree)
- Ashoka tree
- Bael tree (Golden apple/Wood apple tree)
Organizations must ensure that each employee should plant at least one tree of his/her choice and over and above these five trees which should be planted.
The Institutions must also ensure that the employee takes care of plant planted by them during the year so that it survives and flourishes .
BANKING REGULATION (AMENDMENT) ORDINANCE, 2020
Focus: GS-III Indian Economy
Why in news?
The President has promulgated the Banking Regulation (Amendment) Ordinance, 2020, which amends the Banking Regulation Act, 1949 as applicable to Cooperative Banks.
Highlights of the Ordinance
- It seeks to protect the interests of depositors and strengthen cooperative banks by improving governance and oversight by extending powers already available with RBI in respect of other banks to Co-operative Banks.
- The amendments do not affect existing powers of the State Registrars of Co-operative Societies under state co-operative laws.
- The amendments do not apply to Primary Agricultural Credit Societies (PACS) or co-operative societies whose primary object and principal business is long-term finance for agricultural development.
- The Ordinance also amends Section 45 of the Banking Regulation Act to enable making of a scheme of reconstruction or amalgamation of a banking company for protecting the interest of the public, depositors and the banking system and for securing its proper management, even without making an order of moratorium, so as to avoid disruption of the financial system.
Cooperative Banks
- Co-operative banks are financial entities established on a co-operative basis and belonging to their members.This means that the customers of a co-operative bank are also its owners.
- Cooperative Banks continue to be important and the ideal organisations even in the changing economic environment, as participation and inclusion are central to poverty reduction.
More details about Cooperative Banks
- Co-operative banks in India are registered under the State’s Cooperative Societies Act.
- The Co-operative banks are also regulated by the Reserve Bank of India (RBI) and governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1955.
- The Registrar of Cooperative Societies (RCS) is in control of management elections and many administrative issues as well as auditing, and the RBI brought them under the Banking Regulation Act as applicable to cooperative societies.
- Urban cooperative banks have been under the radar of the RBI, but because of dual regulation either of them did not have as much control over these banks in terms of supersession of boards or removal of directors.
Structure of co-operative banks in India:
- Broadly, co-operative banks in India are divided into two categories – urban and rural.
- Rural cooperative credit institutions could either be short-term or long-term in nature.
- Short-term cooperative credit institutions are further sub-divided into State Co-operative Banks, District Central Co-operative Banks, Primary Agricultural Credit Societies.
- Long-term institutions are either State Cooperative Agriculture and Rural Development Banks (SCARDBs) or Primary Cooperative Agriculture and Rural Development Banks (PCARDBs).
Problems with Cooperative Banking in India
- Politicians in local as well as in state use them to increase their vote bank and usually get their representatives elected over the board of director in order to gain undue advantages.
- The cooperatives in northeast states and in states like West Bengal, Bihar, Odisha are not as well developed as the ones in Maharashtra and Gujarat. There is a lot of friction due to competition between different states, this friction affects the working of cooperatives.
- A serious problem of the cooperative credit is the overdue loans of the cooperative banks which have been continuously increasing over the years.
- Large amounts of overdues restrict the recycling of the funds and adversely affect the lending and borrowing capacity of the cooperative.
- The cooperatives have resource constraints as their owned funds hardly make a sizeable portfolio of the working capital.
- Raising working capital has been a major hurdle in their effective functioning.
