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The Standing Committee on Finance will not submit its report on the Banking Regulation Amendment Bill 2011 during the current session of Parliament ending on Thursday. This may delay granting of new banking licences.
Sources in the standing committee told Business Line , “Annual reconstitution of the committee is due, so any report will be finalised only after that. The report can be expected only during the winter session.” This committee was supposed to give its report on pension and banking Bill during the current session but has given just on pension only”.
However, the main reason for delay, according to a member of the committee, is that more deliberations are required. The banking industry as well as the corporates planning to apply for new licence are eagerly waiting for the passage of the Bill.
For the existing players, the Bill, once enacted, will help in attracting more investment. This Bill proposes to raise voting rights of the shareholders of nationalised banks from one per cent to 10 per cent. On the other hand, the Bill proposes to remove the existing restriction on voting rights limited to 10 per cent in the case of the private banks.
The Reserve Bank of India has already clarified that it would wait for the amendment of the Bill before granting new banking licences. The Bill proposes to confer power upon the Reserve Bank to call for information and returns from the associate enterprises of banking companies to inspect the same, if necessary.
The Bill also proposes to confer power upon the RBI to supersede the board of directors of a banking company for a total period not exceeding 12 months and appoint an administrator to manage the banking company during the said period. The RBI feels that such a power will help it in regulating the new as well as existing entities in much better manner.
Once the standing committee gives its report on the Bill, the Government might make some changes in it. This will require approval from the Cabinet, then the revised Bill can be brought for consideration and passage.
Sources said the agenda for winter session seemed very heavy. The Government has to get the Constitutional Amendment Bill for the goods and services tax (GST) and Direct Taxes Code passed on priority. So, putting banking Bill on priority will not be easy, they added.
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