New Delhi: The Congress and DMK on Wednesday opposed the Banking Regulation (Amendment) Bill tabled in the Lok Sabha, stating that it infringes upon the rights of states.
The bill seeks to bring cooperative banks under the supervision of the Reserve Bank of India (RBI). It replaces an ordinance the Union Cabinet had approved in June.
Urging the government to withdraw the bill, Congress' Manish Tewari said resorting to the ordinance route to make laws "undermines the majesty of Parliament" and is an attack on the legislative institution.
At a point when the country's GDP growth rate has been in a freefall for seven quarters preceding the lockdown and when all economic activity during the lockdown had come to a complete standstill, there was absolutely no rationale for promulgating the ordinance, especially when the bill was under consideration in this House, he said.
"In a federal polity, this ordinance and the bill which seeks to replace (it), is a frontal assault on the federal structure of the Constitution and this will have long-term implications on the democratic polity of India," Tewari said.
He also said the "hair-splitting" which Finance Minister Nirmala Sitharaman has attempted by segregating primary agricultural credit society, long term credit society and district cooperative banks is going to create "utter mayhem" in the agricultural economy, if not anarchy, because of the symbiotic linkages between these bodies.
The amendments proposed in the bill do not apply to primary agricultural credit societies or co-operative societies whose primary object and principal business is long-term finance for agricultural development, and which do not use the words 'bank', 'banker' or 'banking'.
Sitharaman, while moving the bill in the Lok Sabha, said, "We are not doing anything to touch state cooperatives, we are not doing anything to primary agricultural credit societies, we are not doing anything to touch cooperative societies whose primary object and business is providing long-term finance for agricultural development."
The amendments would be applicable only on those cooperative societies which are engaged in banking, she added.
Tewari further said if there have been instances of malfeasance in district cooperative central banks and urban local cooperative banks, there are also as many success stories.
"State governments are more than competent to discharge their functions," he added.
Strongly opposing the bill, DMK MP Senthil Kumar said this will be seen as infringement of the states' rights.
Kumar said he differed on the argument of the finance minister that many cooperative banks in the country are incurring losses.
Citing the example of Tamil Nadu, he said 128 cooperative banks are running successfully in the state .
"...(the bill) will be seen as infringement of the states' rights and infringement of states' rights have constantly been seen by this government... This government is undermining the process of democracy for a very, very long time," he added.
Kumar also said the RBI is already overloaded with many other responsibilities and regulating cooperative banks will further increase its load.
"The incompetence of this government was seen in the lack of interest in recovering the bad loans from the likes of Mallyas and Modis, but to go after the agriculturist," he alleged.
He also said the country is undergoing a serious health and economic crisis "created by the government" and it is blaming its shortcomings on the COVID-19 pandemic and saying it is 'an act of God'.
Trinamool Congress member Saugata Roy said he supports the contention of the DMK MP regarding the success of south Indian cooperative banks and "where he said this bill is in infringement of the states' rights."
Roy further said the RBI has not been a successful regulator and it failed to take preemptive steps in the case of Yes Bank.
"Actually this government is hampering the cooperative movement. I do not think that such a bill was necessary. I do not think that RBI has proved to be the best regulator in the country, I do not think that the power of the states' cooperatives should be taken away," Roy said.
Trinamool Congress MP Nusrat Jahan Ruhi also opposed the bill, while TDP's Jaydev Galla welcomed the legislation.
Supporting the legislation, BJP's Shivkumar Udasi said passing the bill will boost depositors' confidence and also prevent further scams.
YSRCP MP Lavu Sri Krishna Devarayalu too supported the bill but added that "let us not make the RBI as one stop solution for every problem".
G Kirtikar of the Shiv Sena also spoke in favour of the bill.
BJP's Tejasvi Surya said from the perspective of a depositor, a bank is a repository of trust. The moment a financial institution uses the word 'bank', the depositors presume that it is supervised and guided by RBI therefore his deposits are safe.
The depositor does not understand nor does he know that multiple legislations cover the field of banking and cooperative banks.
"This dual control regime therefore...creates a peculiar practical as well as a constitutional problem," he said.
Nothing highlights this anomaly better than the recent redressal of Yes Bank, while depositors of Punjab & Maharashtra Co-operative (PMC) Bank as well as Sri Guru Raghavendra Sahakara Bank continue to be in distress, he added.
A M Arif (CPI-M), Saptagiri Sankar Ulaka (Congress) and Sunil Dattatray Tatkare (NCP) also participated in the discussion.