Lok Sabha passes bill to amend banking regulations

The Lok Sabha today passed the Banking Amendment Bill 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.

The Banking Laws (Amendment) Bill, 2011, passed by the Lok Sabha today, provides for increased foreign investment in the banking sector by increasing shareholders' voting rights. The bill also paves the way for issuance of new licences and consolidation in the sector.

The bill proposes to increase shareholders' voting rights to 26 per cent from the existing 10 per cent.

The government, however, rejected amendments proposed by the Left parties. Finance minister P Chidambaram said the government has accepted all major recommendations of the standing committee on finance.

"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.

Chidambaram also said the Competition Commission clause in the bill has been modified to allow the Reserve Bank of India to remain the banking regulator, while the Competition Commission of India (CCI) would regulate mergers and acquisitions.