The Lok Sabha on Tuesday passed the Banking Laws (Amendment) Bill, paving the way for setting up new private banks and strengthening the regulatory role of the Reserve Bank of India.
The RBI has now been empowered to supersede bank boards to safeguard depositors and shareholders’ interests, as the RBI will be able to investigate the books of the associate enterprises of a bank.
The bill also raises the ceiling on the voting rights of the shareholders of a nationalised bank from 1% to 10% and eases the voting right curbs on foreign shareholders in an Indian bank from the current 10% cap.
Several industrial houses, including the Anil Ambani-controlled Reliance Group and Mahindra and Mahindra (M&M) group, are keen on setting up banking companies.
It was not without much drama that Chidambaram was able to introduce the bill in the Lok Sabha. Saugata Roy of the TMC claimed that some amendments moved were in violation of the rules of the House. He was soon joined by the Left parties and AIADMK, which led to the House being adjourned twice.
But the Lower House cleared the bill after finance minister P Chidambaram withdrew the clauses that sought to allow banks to trade in futures and keep the sector outside the purview of Competition Commission.
“Since the bill is too important for me to pass, I am bringing the bill, dropping the controversial clauses,” Chidambaram said.
Naina Lal Kidwai, country head of HSBC India, said, “We hope... new bank licences may be issued to the private sector soon.”