The government has started the process of consulting various political parties, including Left parties to reach a consensus on removing the 10 per cent cap on voting rights. If this is done, the new Banking Regulation bill can be passed in the coming session of Parliament, and enable the much needed consolidation in the Indian banking industry.
"Some of our friends have some reservations. But we expect to sort out our differences with them," Minister of State for Finance PK Bansal said on the sidelines of the release of an Assocham study on Banking Consolidation on Wednesday.
The Left parties are opposed to amending the present Banking Regulation Act (BRA), fearing change in voting rights rules may lead to Indian banks being taken over by foreign entities.
“We would like consolidation but we will not force it on the banks," Bansal said. But he wouldn't say whether the cap would be entirely removed or some new limit imposed. "Various proposals on capping are being examined by the government to ensure that consolidation process among private banks takes place logically," he concluded.