Page 513 - ES 2020-21_Volume-1-2 [28-01-21]

140 Economic Survey 2020-21 Volume 1

UCBs shall have at least 50 per cent of their aggregate loans and advances comprising
loans of not more than `25 lakh or 0.2 per cent of their tier I capital, whichever is
higher, subject to a maximum of `1 crore, per borrower.

e. Submission of returns under Section 31 (read with section 56) of the Banking
Regulation Act, 1949 - Extension of time: In view of the difficulties faced by UCBs
in submission of the returns due to the ongoing COVID-19 pandemic, the timeline for
the furnishing of the returns for the financial year ended on March 31, 2020, was first
extended by three months, i.e., till September 30, 2020 and then further to December
31,2020.

f. Amendments to the Banking Regulation Act, 1949: Banking Regulation
(Amendment) Act, 2020: The Banking Regulation Act has been amended by the
Banking Regulation (Amendment) Act, 2020. The key changes in the regulatory
regime of UCBs pursuant to the Banking Regulation (Amendment) Act, 2020 are as
under:

• The Reserve Bank has been given powers over the management of the UCBs, owing
to which it can issue directions relating to the management of UCBs including
approval for appointment of Chairman / MD / CEO, removal and remuneration of
MD / CEO. Further, the Board of UCBs would be required to have not less than
51 per cent members having special knowledge / practical experience in specified
areas.
• The statutory restriction on grant of director-related loans / advances has been widened
and common directorship across banks shall be prohibited as per the provisions of the
amended Act.

• The Reserve Bank has been vested with powers of approval of the appointment /
removal of statutory auditors of UCBs.

• Provisions of the revised Act will enable UCBs to raise capital by issue of equity/
preference/special shares and debentures/bonds/like securities subject to such
conditions as the Reserve Bank may specify in this behalf.

• The Reserve Bank has been empowered to supersede the Board of Directors of a UCB;
though in case of a UCB having operations confined to a single State, in consultation
with the concerned State Government.

• The Reserve Bank has been empowered to sanction voluntary/compulsory amalgamation
and to prepare scheme for reconstruction of a UCB with the approval of the Central
Government.

The amended Act provides for winding up of a UCB by High Court at the instance of the
Reserve Bank.