Applicability of Banking Regulation Act to Co-operative Banks is a matter of discussion and it is necessary to identify which Co-operative Societies which are coming under the Act.
By amending Act 23 of 1965 called the Banking Laws (Application, to Cooperative Societies) Act, 1965, Banking Companies Act has been, with certain modifications, made applicable to certain cooperative societies, carrying on the business of banking.
As per the definitions and Section 56(a)(i) of the Act, the Banking Regulation Act applied with effect from 1-3-1966, to the following cooperative Societies:
1. All the State Apex Cooperative Banks
2. All Central Cooperative Banks (meaning principal cooperative societies in States and district in States, primary object of which is the financing of co-operative societies in their respective State and districts.)
3. Such of the primary non-agricultural credit societies including Urban Cooperative Banks, as have banking as their principal business and paid up capital and reserves of a nominal value of Rs. 1 lakh or more.
Banking Regulation Act is not applicable to the following Cooperative Societies
The following Co-operative Societies are excluded from the application of the Act.
As per Section 3 of the Principal Act as substituted by the amending Act , nothing in this Act shall apply to
(a) A Primary Agricultural Credit Society
(b) A cooperative Land Mortgage Bank
(c) Any other cooperative society, except in the manner and to the extent specified in Part V.
The effect of the above provisions in all that the Act does not apply to;
(1) All primary agricultural Credit Societies, whatever may be the value of their paid-up capital and reserves;
(2) All s of the value less non-agricultural primary credit societies with paid-up capital and reserves of the value less than Rs. 1 lakh even though their primary object or principal business is banking and even though they may be accepting deposits from non members
(3) All cooperative credit Societies, the principal business of which is not banking, but is providing financial help to its members and which do not accept deposits from non members; and
(4) All Co-Operative societies not carrying on any banking business.