Banking bill approved in Lok Sabha

Lok Sabha passed the Banking Laws (Amendment) Bill 2011, paving way for foreign investments in the sector and establishment of new private banks and also to achieve greater financial inclusion.
The Bill does not contain controversial clauses of allowing banks to trade in futures and keeping the sector outside the purview of Competition Commission as it was earlier proposed.

Highlights of the Bill:

  • Voting rights of investors in private sector banks raised to 26 %, from 10 % which will boost foreign investments.
  • RBI allowed to supersede boards of private sector banks. 
  • Cap on voting rights of private investors in PSBs raised to 10%, from 1%.
  • CCI to regulate mergers and acquisitions and will also have power to investigate and clear mergers and acquisitions in banking industry

This Bill is expected to provide large number of new banking licences in near future. It will improve penetration of banking services in India.



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