Slew of laws enacted, more needed
A record number of Bills were cleared by Parliament in the winter session, with several economic laws creating an enabling and reassuring environment for the financial sector.
The Bills cleared during the session included the Securitisation and Reconstruction of Financial Assets and Securities Bill to crack down on wilful defaulters, the Securities Exchange Board of India (Amendment) Bill to give more teeth to the capital markets regulator and the Unit Trust of India (Transfer of Undertaking and Repeal) Bill, which helped the government fence its liabilities by splitting the mutual fund.
These were the legislative amendments flagged by the government in Budget 2002-03. However, there were others that have been on the anvil for a while.
The list includes the Prevention of Money Laundering Bill, 2002, the Companies (Amendment) Bill, 2002, the Companies (Second Amendment) Bill and the Competition Bill, 2001.
The Milk and Milk Products Control Order amendment was also cleared, removing stipulations on opening milk processing units in an area.
But, on the whole, the government's performance with regard to the key legislative reforms announced in last year's Budget has been a mixed bag, with several crucial Bills like those on the public debt and the Deposit Insurance Credit and Guarantee Corporation yet to be introduced in Parliament.
The Centre is still working on an integrated food law and an amendment to the Agricultural Produce Marketing Act.
The decision to tone down the Fiscal Responsibility and Budget Management Bill is also being viewed as a step back because the government will not have to follow the budgetary discipline calendar proposed in the original Bill.
The Bill to repeal the IDBI Act to enable corporatisation of the institution is still pending with the parliamentary standing committee on finance. The government introduced the Bill in the winter session of Parliament.
The government also pushed through some key laws Ordinances. At least three economic Bills were first notified as Ordinances, including the UTI Act repeal, the Sebi Act amendment and the Ordinance on Securitisation and Reconstruction of Financial Assets and Securities.
With these laws in place, the results are visible. UTI has been split in two, with one dedicated to assured-return schemes and the other consisting of net asset value-based schemes, with new sponsors in the State Bank of India, the Life Insurance Corporation, Punjab National Bank and the Bank of Baroda.
The securitisation law has resulted in greater powers to banks and financial institutions to tackle their problems of bad and doubtful debts, estimated at over Rs 100,000 crore.
So far, over 15,000 notices have been sent to defaulters, and banks and financial institutions have reported a favourable response on the recovery front. Two asset reconstruction companies have also been set up, though they are yet to be operationalised.
