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Pvt banks voting set to see change

india Updated: Mar 23, 2011 01:25 IST
HT Correspondent
HT Correspondent
Hindustan Times
Highlight Story

The government is pushing ahead with the financial sector reforms that Pranab Mukherjee promised in his budget speech last month.

On Tuesday, the Banking Laws (Amendment) bill 2011, wich seeks to align the voting rights of foreign shareholders in banks with their equity holding, was introduced in Lok Sabha.

Once approved by Parliament, the bill will raise the ceiling on voting rights of shareholders of nationalised banks from 1% to 10%.http://www.hindustantimes.com/Images/HTEditImages/Images/23_03_11-buss-25.jpg

It will also remove the voting right restriction of 10 % for private sector banks in the total voting rights of all shareholders of the banking company.

The Bill would also allow an individual or institution to hold more than 5% in a bank, once the Reserve Bank of India clears it.

Finance minister Pranab Mukherjee had made a strong pitch for financial sector reform measures in his budget speech. Also in the pipeline are politically contentious insurance and pension legislations.

Tuesday's move comes at a time when RBI is preparing draft guidelines to allow private players in the banking sector.

The Bill proposes to empower RBI to dismiss a bank board and force reconstruction of the board.

The proposed amendment exempts mergers and acquisitions in the banking sector from the scrutiny of the Competition Commission of India.

"It is ... proposed to confer power upon the RBI to call for information and returns from the associate enterprises of banking companies also and to inspect the same, if necessary," the statement of objects and reasons of the Bill said.