FE@CAMPUS MASTERMIND: Response by Anky Trivedi to question for Jan 28-Feb 3

Jan 10 2014, 15:39 IST
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SummaryFE@CAMPUS MASTERMIND: QUESTION FOR JAN 28-Feb 3: The Banking Laws (Amendment) Bill, 2012, was recently passed by Parliament. Does India need new banks?

Parliament recently passed the Banking Laws (Amendment) Bill, 2012, which now permits RBI to assume additional regulatory powers over co-operative banks. It also gives the regulator the power to withdraw freedom given to primary co-operative credit societies to operate as banks without a license from RBI , aimed at attracting more foreign investment into the banking industry in yet another move by Prime Minister Manmohan Singh to open up Asia's third-largest economy.

Seeks to increase voting rights of investors in the private sector banks to 26 percent from the existing 10 percent. Shareholders' voting rights in the public sector banks is capped at 10 percent.

Banking bill made easy in points:-

1. The Bill was passed after the government earlier yesterday agreed to drop the contentious Forwards Markets Contract Clause, which proposed permitting banks to enter commodity futures trading.

2. Mr. Chidambaram had ruled out sending the Bill for reconsideration.

3. In October this year, the Cabinet approved the Forward Contract Regulation Act (FCRA) Amendment Bill to give more powers to the FMC, but the Bill is yet to get Parliamentary approval.

4. Four bank employee unions had yesterday threatened to go on strike on Thursday to protest against the Bill. The All India Bank Employees Association (AIBEA), Bank Employees Federation of India (BEFI), All India Bank Officers' Association (AIBOA) and National Union of Bank Employees (NUBE)

India really need new banks:-

"We need more banks. Yes, we are opening new branches, but that's not enough... We need

two-three world-size banks," said Chidambaram, adding the new regulation would help achieve this objective. The new regulation also seeks to bring the banking sector under the competition commission purview.

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