No proposal to amend Banking Act, says FM

The government on Friday said there was no proposal to amend the Banking Regulations Act to make foreign banks keep more than 20 per cent of their net profit for a year with the Reserve Bank of India.

Finance Minister P Chidambaram yesterday said in the Lok Sabha there was no plan to raise the present limit of 20 per cent.

In response to another query, Chidambaram said commercial banks had lost over Rs 11 crore in 2004-05 due to the withdrawals through fake cheques and demand drafts.

"There are few instances of forgery, and that is by way of opening fictitious accounts by fictitious people. There are 47,000 branches of public sector banks and millions of cheques and drafts are issued everyday, and some such cases will be there," the minister said.

Maintaining that the number of such frauds was "very low" compared to the daily number of transactions, he said "the situation is under control and I will advise the RBI to ensure tighter control".

Remittance of profits by 30 foreign banks operating in the country to their head offices abroad had come down from Rs 901.61 crore in 2003-04 to Rs 297.47 crore in 2004-05. The amount in 2002-03 was Rs 390.37 crore, he said.

Answering another question on whether the government was in talks with foreign banks to invest in the flood-ravaged Mumbai's infrastructure, Chidambaram replied in negative.

He added that if the state government forwarded bankable proposals for the purpose, he would take it up with all banks including the foreign ones.

In a written reply, Minister Of State For Finance SS Palanimanickam said the public sector banks had recorded operating profit of Rs 38,413 crore in 2004-05 against Rs 39,475 crore in 2003-04.