Banking Bill passed by Lok Sabha; allows foreign investment in sector

NEW DELHI: The lower house of the Parliament Lok Sabha on Tuesday passed a bill aimed at drawing foreign investment to the banking sector by increasing shareholders' voting rights.

According to Finance Minister P Chidambaram, 84,500 people will be hired by public sector banks this year and 6,000 branches will be opened. Addressing the house Chidambaram said that banks are currently well capitalised.

The bill was passed after dropping a controversial clause allowing banks to trade in commodity futures.

"(We are) withdrawing the clause in deference to the views expressed by members," Finance Minister P Chidambaram said when the House considered the Banking Laws (Amendment) Bill, 2011 for passage amid din.

Speaking on the measure, Anurag Thakur (BJP) sought to know whether the government was withdrawing the amendment and said members of various opposition parties were of the view that it should be dropped.

Soon after, members from the Left and Trinamool Congress rose to express similar views.

At this, Chidambaram rose to say that "in response to suggestions during consultations, although the new clause was suggested by another Standing Committee, the new clause will not be pressed..."

Saugata Roy (TC) said the government cannot have "after thoughts" when it uses a rule to introduce fresh clauses and amendments after the bill has already been scrutinised by the concerned Standing Committee.

Responding to Roy, Chidambaram said several Congress and non-Congress governments in the recent past rule the contingency rule to introduce fresh amendments.

Gurudas Dasgupta (CPI) dubbed the move to withdraw the clause as a "politics of compromise" and said governments should desist from it.

Roy wanted Deputy Speaker Karia Munda to give a ruling against use of rules to introduce fresh amendments, but the Chair said keeping in mind past practices and prevailing rules, government was allowed to use this route.

The government is in a race against the clock to pass reforms it says are needed to breathe life into Asia's third-largest economy, which is headed for the worst year of growth in a decade.