We and bankers were against futures trading clause: BJP

The much awaited banking amendment bill was passed in the Lok Sabha on Tuesday. In an interview to CNBC-TV18 Piyush Goyal, spokesperson, Bharatiya Janata Party (BJP) said, there never was a deadlock between the BJP and the government and the banking bill could have been passed much earlier had the UPA sorted internal problems.

Talking about the controvertial futures trading clause, he added that not only the BJP but the bankers were also against this clause. "I don’t think we want to put banks capital to risk in forward markets. I spoke to several public and private bankers, nobody demanded this clause." Below is an edited transcript of Piyush Goyal's interview on CNBC-TV18 Q: The BJP made its position clear that if the government were to drop that controversial forward markets clause, the government could pass the amendments bill and that is what the finance minister decided to do. So, there has been a breakthrough in the relationship between the BJP and the government when it comes to economic legislation? A: There never was a deadlock between the BJP and the government. We have been continuously engaged with the government on several issues both when Pranab Mukherjee was the finance minister and since Chidambaram came in. As far as banking bill is concerned, it was presented to the parliament. It has been deliberated in the standing committee and both sides have come to an agreement with respect to the banking bill. It could have been passed much earlier provided the government, the UPA could have sorted out their internal problems which they had in the coalition. However, when this bill was introduced we were extremely surprised to find this clause. It was never deliberated, it was never discussed with us and it was not even necessary. I don’t think we want to put banks capital to risk in forward markets. I spoke to several public and private bankers, nobody demanded this clause. We are wondering what could have been the reason to force this clause, fight for it and then delay the bill.

Q: Is there a consensus now, between the BJP and the government on other pending economic legislations, the insurance and pension bills for instance where you state that the Foreign Direct Investment (FDI) cap should be retained at 26 percent. Has there been any conversation with the government, any breakthrough on those two bills? A: We have consistently held that all these bills can be discussed and all the issues can be sorted out. Insurance was introduced by the National Democratic Alliance (NDA), Yashwant Sinha, the chairman of the standing committee himself and had proposed a 49 percent FDI. It was under Congress’s pressure and in consistent with our policy of consensus building that we had dropped 49 and agreed to 26 percent and said let us make a beginning. Now when they brought the 49 percent clause we were broadly in agreement to it. But when in the standing committee it was deliberated and discussed and the facts were laid by the government in terms of actual FDI, the performance of the standing committee and its predominantly held UPA members, endorsed the decision to restrict it to 26 percent and then we had discussions and government said they will restrict it to 26 percent. If they want to bring 49 even now they should discuss with us, we are ready to engage in a dialogue. I have certain concerns on valuation of these insurance companies. We need to recognise that there is an embedded value in these insurance companies. We also need to address the issue of fresh capital because ultimately we cannot allow share swaps to change and without any fresh capital 26 percent becoming 49 percent. I think some of our concerns are very genuine.