Lok Sabha defers discussion on banking reforms Bill
The Lok Sabha postponed consideration and passage of the Banking Laws (Amendment) Bill, 2011 following objections by CPI leader Gurudas Dasgupta that due procedure was not followed.
December 06, 2012 / 17:31 IST
The Lok Sabha postponed consideration and passage of the Banking Laws (Amendment) Bill, 2011 following objections by CPI leader Gurudas Dasgupta that due procedure was not followed. "The Speaker has agreed it (consideration and passage the Banking Laws (Amendment) Bill 2011) to be postponed," Deputy Speaker Karia Munda announced in the house. Dasgupta has objected to taking up of the important financial reform Bill, saying that the government did not follow the procedure for consideration of the legislation in the House.
The Banking Laws (Amendment) Bill seeks to amend three Acts -- the Banking Regulation Act 1949, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980. The consequent changes in the comprehensive amendment Bill will pave way for corporates to set up banks in the country. The Standing Committee on Finance, which has reviewed the Bill, has suggested limiting voting rights of investors in the private sector banks to 26 per cent with a view to maintaining a balance between economic control and promoting corporate democracy.The Banking Laws (Amendment) Bill 2011, introduced in the Lok Sabha in March, 2011, had proposed providing voting rights to investors commensurate with their shareholding in the private sector banks. At present, the voting right is capped at 10 per cent."The (Finance) Ministry may consider increasing the limit only to 26 per cent in order to keep a balance between conflicting factors underpinning the decision, namely concentration of economic power/control and promotion of corporate democracy," the panel had said in its report tabled in Parliament in December last year. The Committee recommended that the RBI must ensure that regulatory mechanism is adequate and strictly complied with to prevent any misuse of the provision of increasing the limit.It had recommended that RBI, being the nodal agency in the banking sector, should conduct due diligence of "fit and proper persons/entities...". The apex bank should also take sufficient safeguards while stipulating conditions as to credentials, source of funds, track record, financial inclusion, before granting approvals under this clause, it had said.The committee, in its report, also asked the government to consider merits of issuing non-voting shares as an avenue to expand the capital base of banks without allowing concentration of management control in a few hands and which would also enable the banks to grow faster.The panel, however, had supported the government's proposal to keep bank mergers outside the purview of the Competition Commission of India temporarily but with certain caveats. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
