New Delhi, Dec. 18: The Lok Sabha today passed the Banking Laws (Amendment) Bill, 2011 after the government accepted the Opposition demand to withdraw a clause allowing commodities futures trading by banks.
The Opposition had claimed the proposal would lead to speculative trading.
The banking bill will strengthen the RBI’s oversight powers, while delegating the regulation of mergers and acquisitions to the Competition Commission of India, besides paving the way for new banking licences to be given out.
The bill also gives voting rights to investors in private sector banks commensurate with their shareholding. The cap on voting rights for investors in private sector lenders will consequently rise to 26 per cent from 10 per cent.
Voting rights of shareholders of nationalised banks have also been raised to 10 per cent from 1 per cent, a move that will make investment in state-owned banks more attractive.
There are 20 nationalised banks and 22 private sector banks in the country.
“The RBI can now move on with issuing new banking licences. The process for inviting application for new banks could start as early as January 2013,” officials said.
However, the minimum capital requirement and guidelines for setting up new banks are still to be notified by the RBI. Only those entities that the central bank deems fit will be allowed to set up shop. The bill also gives powers to the RBI to supersede bank boards as well as to inspect the books of bank associates.
The government today dropped the clause in the bill that allowed banks to trade in commodity futures in deference to the wishes of the Opposition, finance minister P. Chidambaram said.
BJP leader Yashwant Sinha, who heads the Parliament’s standing committee on finance, had earlier said the proposal was not examined by the panel as it was not part of the original bill.
Chidambaram had ruled out sending the bill to the standing committee for reconsideration last week.
The RBI had also voiced its apprehensions on allowing banks to enter this sensitive area as there was no “autonomous” commodity regulator.
Chidambaram today said there were no plans to retrench staff and ruled out any plan to merge small banks. The finance minister said plans were afoot to hire 84,500 people in public sector banks this year.
“Also, 6,000 branches will be opened each year,” the minister said.
He said the government would infuse another Rs 15,000 crore in public sector banks by the end of this financial year. “We have to infuse capital in the banks so that they can lend. The funds will be infused by bonus shares and rights issue,” he said.