The finance ministry on Wednesday said that the financial sector reforms it plans to undertake soon include increasing the foreign investment cap in the insurance sector, reducing the pendency of cheque bounce cases, stopping fradulent deposit collection schemes and allowing regional rural banks (RRBs) to raise private capital.
In its mid-year review, the ministry said the Insurance Law (Amendment), Bill 2008, — approved by the Cabinet in October — will be introduced in the “ensuing session of Parliament”. The Bill, among other things, proposes to increase foreign investment in the sector up to 49% from 26%.
It said the government has proposed to amend the Negotiable Instruments Act, 1881, (Negotiable Instruments and Legal Services Authorities Laws Amendment Bill, 2013) to reduce the pendency of cheque bouncing cases under section 138 of the Act on the recommendations of Inter-Ministerial Group.
Besides, the government proposes to amend the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, to cover the regulatory gaps in the existing laws as to stop the defalcation of public money by entities floating unauthorised money/deposit collection activities/ schemes.
Among other measures, the ministry said NABARD (Amendment) Bill, 2013, — introduced in the Lok Sabha in April — has been referred for examination to the Standing Committee on Finance. The Bill, apart from allowing transfer of the entire equity of RBI in Nabard to central government, seeks to define various expressions, empower central government to increase the capital of Nabard from R5,000 crore to R20,000 crore, enhance the scope of operations of Nabard for lending purposes and provide for establishing and maintaining a fund to be known as the National Rural Credit (Short Term Operations) Fund by Nabard for providing financial assistance by way of loans and advances.
Another Bill before the Standing Committee is the Regional Rural Banks (Amendment), Bill, 2013, — introduced in the Lok Sabha in April — aims to increase authorised capital of RRBs from R5 crore to R500 crore, allow RRBs to raise private capital and appoint private shareholder directors.
The ministry said the legislation approved so far included Banking Laws (Amendment) Act, 2012, (which, among other things, strengthened the regulatory and supervisory powers of RBI), Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2012, and the Pension Fund Regulatory and Development Authority Act, 2013, (among other things to establish PFRDA as a statutory body to develop and regulate pension market).