New Delhi, May 4: In a meeting late tonight, the government cleared 11 bills to be placed in this sitting of Parliament even as the Opposition decided to boycott the rest of the budget session.
Key among the legislation is the decision to remove the 10 per cent cap on the voting rights of private promoters of banks.
The Congress-led government's ally, the Left, is strongly opposed to banking reforms, but Manmohan Singh's cabinet is pressing ahead nonetheless.
'We are opposed to banking reforms. We have alr- eady communicated to the government our reserva- tions. We will oppose the bill,' said Nilotpal Basu of the CPM.
Information and broadcasting minister S. Jaipal Reddy said after the cabinet meeting that the Reserve Bank had been empowered to supersede boards of errant banks as part of the reforms.
It has also been given liberty to regulate the amount of money swilling about in the banking system by changing the cash reserve ratio and the statutory liquidity ratio.
These are instrume- nts the central bank uses to either soak up excess money or release cash into the system.
The Banking Regulation Act 1949 and Reserve Bank of India Act 1934 will be amended to give the central bank greater freedom to regulate commercial and cooperative banks.
But the biggest benefit for banks is the removal of the cap on voting rights. Promoters are now allowed to hold up to 74 per cent but can vote only to the extent of 10 per cent of their stake.
Banks will be allowed to issue preference shares like other companies. They will also get more freedom to lend money.
The Reserve Bank can 'grant exemption to any banking company from the provision of section 20'.
The section bars a bank from making loans to any firm in which any of the bank's directors is interested as a partner, manager, employee or a guarantor.
The cabinet cleared a proposal to offer developers of special economic zones (SEZs) income-tax waiver for 10 years in a block period of 15 years.
Units in SEZs will qualify for a 5-year tax break. They will also be entitled to 50 per cent tax waiver in the next five years and 50 per cent of the ploughed-back export profits for the subsequent five years.