Hope for banking, pension Bills

CPM agrees to a political solution; CPI may try to convince trade unions.

Far-reaching banking and pension reforms may be possible now with the CPI(M) agreeing to a "political" solution to the deadlock with the government over the two Bills related to the sectors.

It has also agreed to keep trade unions, which are opposed to the Pension Fund Regulatory & Development Authority (PFRDA) Bill and the Banking Regulation (Amendment) Bill, out of the talks with the government.

At the UPA-Left Coordination Committee meeting yesterday, it was CPI(M) General Secretary Prakash Karat who insisted on a "political decision." But CPI General Secretary AB Bardhan and National Secretary D Raja wanted the government to talk to trade unions, Left sources said.

As the CPI leaders spoke for the employees, CPI(M) Politburo member Sitaram Yechury was learnt to have quipped, "You (the government) should take Bardhan's help to talk to trade unions."

The change in CPI(M)'s stance is attributed to pressure from the West Bengal government, which is keen on pension reforms. Finance Minister P Chidambaram suggested to the Left leaders that public managers could manage the funds of Group C&D employees by investing the money in government bonds for three years "to begin with."

Chidambaram said managing such huge funds would be tough for LIC, SBI and UTI. "You tell me if there is a fourth one?" he asked the Left leaders, who want public managers to be entrusted with pension funds.

The CPI(M) leaders, including Yechury, who had been voicing the Left's stand on the Bills, kept quiet. As CPI leaders asked the government to talk to trade unions, Defence Minister Pranab Mukherjee said an earlier round of talks with them did not lead to any result. The Left leaders said they would get back on this.

Chidambaram asked them to respond before the next session of Parliament. If India was to continue with over 8 per cent growth, both the Bills must be passed, he said. Prime Minister Manmohan Singh also told the Left leaders that both these Bills must "go through," said sources.

On the banking Bill, Chidambaram said private banks were collapsing and public sector banks could not take over all of them. He said there were only two options""allow foreign banks or domestic industrialists to take over. "You tell me if there is any other option," Chidambaram said, leaving the Left leaders speechless.

The government said that with voting rights restricted to 10 per cent, an investor did not have the leverage to alter either the management or the business strategy to receive commensurate rewards. The ceiling precluded strategic investment in the sector and was not consistent with the policy of wooing investment in the sector, Chidambaram said.

It is, therefore, proposed to amend Section 12(2) of the Banking Regulation Act, 1949, subject to safeguards like RBI approval for acquisition of more than 5 per cent shares.

While the CPI(M) leaders kept quiet, CPI leaders said the government should talk with the bank unions. The Left parties, however, agreed to give their views on this in the next coordination committee meeting, expected in the second week of November.