The Congress-led United Progressive Alliance (UPA) government seems to be in a hurry this winter session. What's the latest talk in the corridors of power is: It is now or never for the Congress party. Political pundits are of the view that the party has thrown its weight behind the Prime Minister’s economic reforms.
Emboldened by the passing of multi-brand retail FDI in both the Houses, the government has now secured the Lok Sabha’s green signal for the Banking Laws (Amendment) Bill, 2011. The bill aims at attracting more foreign investment into the banking industry. Economists say it is still too early to predict whether big-ticket reforms are back on track or not.
Here’s a list of 10 things you must know about Banking Bill:
1) The Reserve Bank of India (RBI) had wanted the government to amend the banking laws before starting the process towards issuance of new banking licences.
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2) The bill also gives voting rights to investors in private sector banks commensurate with their shareholding. At present, there are 20 nationalised banks and 22 private sector banks in the country.
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3) The cap on voting rights for investors in private sector lenders will consequently rise to 26 per cent from 10 per cent. In public sector banks (PSU) banks, the cap on voting rights has been raised to 10 per cent from 1 per cent.
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4) The minimum capital requirement and guidelines for setting up new banks are still to be notified by the central bank.
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5) The bill provides the RBI more powers and the central bank can supersede bank board and inspect the books of bank associates.
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6) To woo the Opposition, mainly the Bharatiya Janata Party (BJP), the government dropped the clause in the bill that allowed banks to trade in commodity futures.
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7) The Competition Commission of India to decide on mergers and acquisitions. The Federation of Indian Chambers of Commerce and Industry (Ficci) welcomed passage of the bill and said this would lay the foundation for many reforms in the sector.
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8) Finance Minister P Chidambaram contested the charge of job losses. He said: “The plans were afoot to hire 84,500 people in PSU banks this year. Also, 6,000 branches will be opened each year.”
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9) The Finance Minister expressed the commitment of the government to infuse Rs.15,000 crore into public sector banks in the current financial year and retain their basic character.
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10) The bill will allow foreign banks to convert their Indian operations into local subsidiaries or transfer shareholding to a holding company of the bank without paying stamp duty.
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Timeline
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March 22, 2011 | The Banking Laws (Amendment) Bill introduced in the Lok Sabha
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December 13, 2011 | Standing Committee on Finance submits its report on the Bill
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April 26, 2012 | Amendments to the Bill get Cabinet nod for being taken up in Parliament
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December 10, 2012 | FM proposes new clause on futures trading by banks; BJP opposes
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December 11, 2012 | FM reaches out to the Opposition to seek support for the Bill
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December 18, 2012 | Lok Sabha passes the Bill after dropping contentious proposals
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ALSO SEE | Companies Bill made easy in 10 steps
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