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| Edited By: |Source: PTI |Updated: Mar 19, 2018, 02:06 AM IST
The Banking Amendment Bill, a major reforms legislation, on Tuesday got the approval of the Lok Sabha after the government dropped the controversial provisions relating to allowing banks to trade in futures and keeping the sector outside the purview of competition commission. "Since the bill is too important for me to pass, therefore I am bringing the Bill dropping the controversial clauses," finance minister P Chidambaram said, winding up the discussion on the Banking Laws (Amendment) Bill, 2011.
The bill, which seeks to strengthen banking regulation, was later passed by the voice vote after the amendments proposed by the Left parties were rejected by the house. The Bill, along with proposed legislations on pension and insurance, was one of the five key reforms measures on the government's agenda during the current session of Parliament.
The government dropped the controversial changes in the Bill in deference to the wishes of opposition, the minister said, adding it has accepted all major recommendations of the standing committee on finance.
On the proposal to allow banks to participate in the commodity futures trading, he said, it was based on the recommendations of the standing committee on food and consumer affairs and report of the Reserve Bank's working group. As regards other issues, he said, while RBI would regulate the banking sector, the Competition Commission of India (CCI) would look into competition practices in the banking sector.
The minister also expressed the commitment of the government to infuse Rs 15,000 crore into public sector banks in the current financial year and retain their basic character. The Banking Bill also seeks to raise the voting rights of investors in private sector banks to 26%, from 10%. It also allows RBI to supersede boards of private sector banks and increase the cap on voting rights of private investors in PSBs to 10%, from 1%.
On concerns of members that banking reforms would lead to job losses, the minister said public sector banks would be hiring about 84,500 people this year and 6,000 branches would be opened every year. "I cannot foresee our banks retrenching anyone. In fact we will recruit many more," Chidambaram said.
He said the Justice BN Srikirishna Committee has given its draft report and once the final report comes, the government would come out with a comprehensive banking law. On consolidation in the banking sector, Chidambaram said India will need 2-3 world class banks and there would still be over 20 PSBs after mergers. Private sector banks are growing, he said, adding there was no reason why the PSBs should not be encouraged to grow.
Describing the rising NPAs as a matter of concern, but not alarm, Chidambaram said, "This is not the time to tighten the screws. They are not willful defaulters. This is the time to restructure loans." Rejecting opposition's charge that 'Manmohan-Chidambaram' economic policies were responsible for slowdown, the Minister said, "Do not equate me with Manmohan Singh. I do not have his vast experience.
"Manmohan model showed that we can achieve 9% growth. It also showed how to reduce fiscal deficit. Manmohan model must also be credited for making India the second fastest growing economy," he said.
