Govt backpedals on banking reforms as Parliament bites
The government is set to go slow in bringing reforms in the banking sector including amending the Banking Regulation Act, 1949. Mahua Venkatesh reports.business Updated: Sep 25, 2012 22:55 IST
The government is set to go slow in bringing reforms in the banking sector including amending the Banking Regulation Act, 1949.
Banking reforms require Parliament nod though last month finance minister P Chidambaram initiated the process of introducing the much awaited bill in the Lok Sabha.
Besides, the government also does not want to antagonise the banking trade unions."It would first focus on issues that can be easily implemented and would not require a Parliament route. Reforms in the banking sector needs Parliament approval and it seems unlikely that the government would take it up during the current tenure," said a finance ministry official.
Earlier, the Reserve Bank of India said that it would give fresh banking licences to private entities only after the government amended the Banking Regulation Act. However, now the finance ministry is trying to work out a method by which licences can be granted without amending the act.
The bill was aimed at providing more teeth to the central bank. The RBI would be able to supersede the board of directors of a banking company if required and appoint an administrator to manage it for a total period not exceeding 12 months. The bill also proposes to increase voting rights of shareholders. It also proposed raising of voting rights of individual investors to 26% in private sector banks.
“We will strongly protest amendment of the Banking Regulation Act, if the government decides to move with it as it would detrimental to the developmental needs of the Indian economy,” said CH Venkatachalam, general secretary, All India Bank Employees Association (AIBEA).