Banking Laws (Amendment) Bill gets Rajya Sabha nod

Banking Laws (Amendment) Bill gets Rajya Sabha nod

 IANS   New Delhi     Last Updated: December 21, 2012  | 11:02 IST

Parliament on Thursday gave its nod to the long-awaited Banking Laws (Amendment) Bill , paving the way for issuance of new bank licences and consolidation in the sector.

The upper house of Parliament on Thursday cleared the bill, two days after the Lok Sabha, the lower house, gave the legislation its nod.

The Banking Laws (Amendment) Bill, 2012, which has now been cleared by both houses of Parliament, seeks to increase voting rights of investors in the private sector banks to 26 percent from the existing 10 per cent. Shareholders' voting rights in the public sector banks is capped at 10 per cent.

This will make the Indian banking sector attractive for the overseas investors and is expected to lead to consolidation in the industry.

The bill will become law once President Pranab Mukherjee signs it.

The new regulation gives power to the Reserve Bank of India (RBI) to issue new bank licences.

Winding up discussion on the bill in the house, Finance Minister P. Chidambaram said the modified legislation would help create "world size" banks in India.

"We need more banks. Yes, we are opening new branches, but that's not enough... We need two-three world-size banks," said Chidambaram, adding the new regulation would help achieve this objective.

The new regulation also seeks to bring the banking sector under the competition commission purview.

Chidambaram said that while the RBI would regulate the banking sector, the Competition Commission of India (CCI) would look into competition practices in the banking sector.

He said the RBI would frame the guidelines and issue new bank licences without any bias.

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