September 16, 2020
Nusrat Jahan speaks on The Banking Regulation (Amendment) Bill, 2020
FULL TRANSCRIPT
Thank you so much, Madam.
We are clearly opposing the Bill. With regards to the amendment of clause 12 by inserting clause 12(1) in section 56, we would like to say that these provisions go against the tenets of cooperative movement and cooperative societies registered under the West Bengal Cooperative Societies Act 2006, as amended.
Raising of shares by way of public issue or private placement is not provided for in the West Bengal Cooperative Societies Act 2006. It is a corporate concept where ownership is determined by the number of shares held. WBCS Act provides for one member, one vote. There is also a prescribed ceiling on holding of shares under the West Bengal Cooperative Societies Act. Moreover there is no provision for issuing unsecured debentures by the cooperative societies in the WBCS Act.
Also as per WBCS Act, bonds cannot be issued without the prior approval of the state government. But this banking regulation ordinance provides for public issue of private placement of bonds. Therefore, it takes away the rights of the state government.
Secondly, with regards Madam, to the Amendment of section 12 by inserting Section 12 sub-section 2(i) and 12 sub-section 2(ii), the inserted Section 12 sub-section 2(i) states that no person shall be entitled to demand payment towards surrender of shares issued to him by a cooperative bank. As per inserted Section 12 sub-section 2(ii) a cooperative bank shall not withdraw or reduce its share capital to the extent and subject to such conditions as RBI may specify.
Our views on this is, the privilege of the members may be compromised. Moreover, the redemption of shares to state governments will not be possible either thus inter alia the states cannot subscribe to a corporate bank share capital. On the other hand, Section 12 sub-section 2(ii) imposes more restrictions on the freedom of cooperative banks.
Lastly, the Amendment of Section 56 by inserting sub-section A4 and 56 A5, as per this inserted provision 56 A4 reference to the provision of the Companies Act, 1956, except in part 3 and part 3a, shall be construed as references to the corresponding provisions, if any, of the law under which the cooperative bank is registered. As per this inserted provision 56 A5, references to registrar or registrar of companies shall be construed as references to central registrar or registrar of cooperative societies, as the case may be under the law under which the cooperative bank is registered.
Our views on this would be: implication is that if cooperative banks may be converted into joint stock companies, this would lose their cooperative character. For the above concerns, the Amendments made by inserting sub-sections 12(1), 12(2)(i), 12(2)(ii), 56A4 and 56A5 may kindly be removed from the Bill.
Thank you so much for giving me the opportunity.
