Tuesday, December 18, 2012

Banking Bill passed by Lok Sabha; allows foreign investment in sector

The Banking Amendment Bill, a major reforms legislation, on Tuesday got 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. 

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