New banking bill cleared by both houses of Parliament

The Rajya Sabha today approved the banking amendment bill amidst protests by nearly five lakh bank employees across the country, which paralysed banking operations in many parts of the country.

The day-long strike intended to draw attention of the people to the danger of banking reforms being pursued by the government through the Banking Laws (Amendment) Bill 2011.

SBI employees did not join the strike and the bank was not closed.

With both houses of Parliament clearing the bill, the stage is set for increased foreign investment in the banking sector and issuance of new licences and consolidation in the banking sector.

The Reserve Bank of India (RBI) has already formulated draft rules for the issue of new bank licences to private banks, but has been holding back for want of supporting legislation. RBI may now start issuing new banking licences to private entities.

However, analysts say the RBI could issue only three to four licences in the next 12-15 months, denting prospects of a flood of new lenders.