Advertisement

Updated July 17th, 2021 at 18:01 IST

Sharad Pawar writes to PM Modi over issues in Co-operative banking amidst new amendments

Sharad Pawar submitted a six-page letter to Prime Minister pertaining to the Banking Regulation Act and the issues faced by the Co-operative Sector Banks.

Reported by: Sudeshna Singh
Sharad Pawar
Image-PMOIndia | Image:self
Advertisement

In a key development, the Nationalist Congress Party (NCP) supremo Sharad Pawar submitted a six-page letter to Prime Minister pertaining to the Banking Regulation Act and the issues faced by the Co-operative Sector Banks. In the letter, he has pointed down three inconsistencies and the resulting legal inefficacy of normative provisions of the Act that are in conflict most specifically with the 97th Constitutional Amendment, State Co-operative Societies Acts, and with the Co-operative Principles. 

Pawar writes to PM Modi on Banking Regulation Act and issues of Co-operative Sector Banks

Acknowledging that the act aims to strengthen the co-operative banks by increasing professionalism, enabling access to capital, improving governance among others, he underlined, "Certain inconsistencies and the resulting legal inefficacy of normative provisions of the Act that are in conflict most specifically with the 97th Constitutional Amendment, State Co-operative Societies Acts, and with the Co-operative Principles."

In conflict with 97th Constitutional amendment

Citing the 97th Constitutional amendment by which the word 'co-operative society' was added in Article 19(1) (c) of Part III of the constitution, he underlined that 'all citizens have the right to form a co-operative bank'. Further, he cited Article 43 B, which states that 'The state shall endeavor to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies. Having cited the articles, he pointed out the real intention, which as per him was 'to encourage the co-operative movement, enhance the public faith in Co-operatives and ensure people's participation in the economic development of the country'. 

He then highlighted that the newly introduced impugned provisions of section 4A, 4G, 4J, 4L, 4 M, and 4Q of the Amendment Acts, were directly intervening in the functioning of the affairs of the Co-operative Banks. "Therefore, I opine that the said provisions are unconstitutional and ultra vires, for having being passed without legislative competence."

In conflict with State Co-operative Societies Acts

There is a conflict with provisions of state cooperative societies act, the NCP chief says in his letter to the PM, adding, "The powers bestowed on the Reserve Bank of India (RBI) to deal with matters pertaining to issuance and refund of share capital, appointment or disqualification of directors, the constitution of the board of management, the appointment of the chief executive (CEO), and audit obligations can be construed as excessive legislation. The amended act overrules various provisions of the cooperative act regarding the formation of the board and election of chairman, the appointment of managing director by holding a caveat in terms of such appointments."

In conflict with Co-operative Principles

He also pointed out that the provisions are contradictory with the principles of Co-operation- 1) open membership and 2) democratic control. "The Amended Act also empowers the Reserve Bank to remove and replace any officer or employee. Perhaps this is the first time that the regulator(RBI) has been bestowed with such wide administration power which may interfere with the day-to-day working of Co-operative Bank, and violate the Co-operative Principle-Autonomy and Independence," Pawar wrote in the letter. 

 

Advertisement

Published July 17th, 2021 at 18:01 IST

Your Voice. Now Direct.

Send us your views, we’ll publish them. This section is moderated.

Advertisement
Advertisement

Trending Quicks

Advertisement
Advertisement
Advertisement
Whatsapp logo