| The Bills were introduced in the Lok Sabha by Finance Minister P Chidambaram amidst protests by the Left parties. They objected to the government's intention to remove the 10 per cent cap on voting rights for foreign investors in private banks, proposed in the Banking Regulation (Amendment) Bill. |
| When Chidambaram stood up to seek leave to introduce the Bill, CPI(M) members Rupchand Pal and Basudeb Acharya protested but Speaker Somnath Chatterjee overruled them. |
| The Reserve Bank of India (Amendment) Bill seeks to provide more operational flexibility to the RBI to fix the cash-reserve ratio. |
| It has also defined derivatives, repo and reverse repo and empowered the central bank to deal in derivatives, lend or borrow securities and undertake repo or reverse repos"" the other monetary instruments used to deal with excess or inadequate liquidity. |
| The amendments to the Banking Regulation Act also provides that the RBI specify acquisition of a minimum percentage of shares in a banking company if it considers this necessary. |
| The Bill also seeks to empower the RBI to specify the statutory liquidity ratio without any floor or ceiling to give more operational flexibility. |
| The present restriction on lending to directors and companies of firms in which the directors are interested is creating difficulties for banks in appointing independent directors. The Bill, therefore, proposes more teeth to the central bank to grant exemption to banking companies in appropriate cases. |
| The legislation seeks to empower the central bank to supersede a bank's board of directors and appoint an administrator to manage it until alternate arrangements are made when a banks board functions in a manner detrimental to the interest of depositors. |
| Making regulatory powers of the RBI more effective, the central bank is proposed to be given power to order a special audit of cooperative banks for more effective supervision. |
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