Reforms in the financial sector are yet to see the light of the day. Crucial bills like the Banking Regulation (Amendment) Bill, State Bank of India (Amendment) Bill, along with Pension Fund Regulatory & Development and Authority Bill, have already been introduced in Parliament and are awaiting approval.

In addition, the Union Cabinet has referred the Insurance Laws (Amendment) Bill, 2006 to a group of ministers. The GoM is yet to give its final recommendations. The Payment and Settlement Systems Bill is the only one, which has got the Parliamentary approval.

The Micro Financial Sector (Development and Regulation) Bill had also been introduced in March, 2007, in the Lok Sabha, which is still under consideration.

Pending reforms in the financial sector are becoming a cause for concern. ?In case the government has to sustain a growth rate of about 9%, reforms in the financial sector would be key and must be undertaken at the earliest,? an industry analyst said. What is worrisome is the fact that these reform measures are unlikely to be pushed in 2008-09 with the approach of the general elections. The insurance sector has had little reason to cheer. The industry being capital intensive, huge capital infusion is required at this stage to carry on with the expansion programme.

However, the government has not been able to increase the foreign direct investment limit to 49% from the current 26%. Even the Economic Survey, presented this year, pointed out that the government must increase the FDI limit in the insurance sector at the earliest. Though the UPA government proposed to raise the FDI limit in 2004-05, it has not acted on it due to stiff opposition from the Left parties. The private insurance companies are required to list themselves within 10 years of their operation and this would be possible only if there is additional capital infusion at this stage. ?The capital infusion would also help the companies in breaking even which is a prerequisite for going public,? a source said.

The notification on mortgage guarantee companies has been issued. The guidelines are yet to get finality. However, the Reserve Bank of India?s shares in the State Bank of India have been transferred to the government. The Union Budget, 2007-08 had made a a Rs 40,000 crore provision for the same.

The government has released Rs 1,100 crore for interest subvention for facilitating banks to provide farm loans at 7% interest rate.