NEW DELHI: Rajya Sabha member and NCP president Sharad Pawar called on Prime Minister Narendra Modi in the national capital on Saturday and expressed reservation over RBI's "excessive regulation" of cooperative banks.
He said that certain amendments in the Banking Regulation Act giving RBI more power over cooperative banks are "unconstitutional".
Last year, Parliament had approved amendments to the BR Act which led to cooperative banks coming under the supervision of the Reserve Bank of India.
In a statement released after his meeting, Pawar said that he pointed out "certain inconsistencies" and the resulting legal inefficacy of normative provisions of the Banking Regulation Act.
He said the inconsistencies are in conflict most specifically with the 97th Constitutional Amendment, State Co-operative Societies Acts and with the Co-operative Principles.
In his letter, Pawar said the "incorporation, regulation and winding up" of cooperative banks should be the exclusive domain of the states and not the Reserve Bank of India.
Pawar said that the various sections introduced to amend the Banking Regulation Act are beyond the legislative competence of Parliament and void under Article (123)(3) of the Constitution.
He further said the powers bestowed on RBI to deal with matters pertaining to issuance and refund of share capital, appointment or disqualification of directors, constitution of board of management, appointment of CEO, audit obligations, etc can be construed as "excessive regulation".
Pawar, however, also reiterated that the aims and objectives of the Amended Act are well-intentioned.
Pawar's meeting comes days after the Modi government created a separate cooperation ministry which is being headed by Amit Shah, who is also the home minister.
The amendments to the BR Act gave adequate powers to the central bank to control the cooperative banks the same way it supervises scheduled cooperative banks. It also gave the RBI a say in key appointments.
