Take LIC public, limit govt holding in banks to 51%, Jaitley told
10 June 2014
Representatives of banks and financial institutions have asked the Narendra Modi-led government to take insurance behemoth Life Insurance Corporation (LIC) public and bring down government holding in public sector banks to 51 per cent to make them more efficient.
Banks also sought 100 per cent tax deduction on the provisions they make towards bad debt and the setting up of a dedicated asset reconstruction company (ARC) for infrastructure assets.
A case was also made for increasing the threshold limit for deduction of tax at source on interest on fixed deposits from the current level of Rs 10,000 to, say, Rs 20,000, in order to boost financial savings.
These are among the several suggestions that bankers gave to finance minister Arun Jaitley and minister of state Nirmala Sitharaman at a pre-budget meeting in New Delhi today.
In their pre-budget meeting with finance minister, representatives of the banks and financial Institutions sought early resolution of issues such as recapitalization of public sector banks, dilution of government ownership in public sector banks up to 51 per cent, implementation of recommendations of Naik Committee Report, removal of mismatch between asset liability and banks' balance sheets and a revision of the definition of priority sector lending among others.
They also sought continuation of interest subvention scheme for investment lending in agriculture sector, inclusion of about 6 lakh joint collaborative groups and about 72 lakh women self help groups (SHGs) promoted by NABARD in priority sector lending, and exemption of NABARD from service tax for service rendered to small farmers.
They also sought tax exemption under section 80C of the Income Tax Act be raised, insurance awareness be made part of corporate social responsibility(CSR), cheaper credit to 100 mid cap exporters, interest subsidy for solar power projects.
The setting up of a National Asset Management Company for dealing with NPAs of the banks would give the much-needed boost to priority sector lending, they pointed out.
A more bolder approach in case of Rajiv Gandhi Equity Scheme (RGESS) to enlarge its scope, relook at various provisions of New Companies Bill, inclusion of venture capital in case of small business/entrepreneurs as priority sector lending.
Other suggestions included:
- Freeing urban cooperative banks from payment of income tax;
- Creation of an umbrella organisation for all 1600 primary cooperative banks;
- Creation of national level apex bank of UCB sector with Rs5,000 crore as seed share capital to this;
- Lift bar on admitting cooperative society as a member of UCBs under the existing Banking Regulation Act;
- Amendment towards adding subscriptions of UCB's Association in 'Negative List', and raising the existing limit from Rs1,00,000 to Rs 3,00,000 in general and;
- Allowing UCBs to insure voluntarily deposits and loans up to Rs5 lakh per individual by paying risk weighted premia.
Representatives from different banking and financial institutions who participated in today's meeting included Arundhati Bhattacharya of State Bank of India, Rajiv B Lall of IDFC Ltd, M Narendra of Indian Overseas Bank (IOB), KR Kamath of Punjab National Bank (PNB), SS Mundra of Bank of Baroda (BOB), Sudhir Kumar Jain of Syndicate Bank, Rajiv Rishi of Central Bank of India, MS Raghavan of IDBI,. Harsh Kumar Bhanwala of NABARD, SK Roy of LIC, G Srinivasan of New India Insurance, Yaduvendra Mathur of EXIM Bank, SB Nayar of India Infrastructure Finance Company Ltd (IIFCL), Arnab Roy the National Housing Bank, Naina Lal Kidwai of HSBC, Sunil Kaushal of Standard Chartered Bank, Uday Kotak of Kotak Mahindra Bank Ltd, Malay Mukharjee of IFCI,. Shikha Sharma of Axis Bank Ltd, Mukund L Abhyankar of National Federation of Urban Cooperative Banks and Credit Societies Ltd (NAFCUB) and Raman Aggarwal of the Finance Industry Development Council (FIDC) among others.
Finance minister Arun Jaitley assured that the issues raised and suggestions made by different representatives of banks and financial institutions will be looked into in detail and will be duly considered.