In order to advance reforms in the banking industry, the government is likely to introduce amendments to Banking Regulation Act 1949 and other laws during the upcoming Budget Session. Apart from this, amendments in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 are needed for privatisation of public sector banks, PTI reports, citing sources.
These Acts caused banks to be nationalised in two stages, and in order to privatise banks, certain aspects of these laws must be amended. Amendments, if approved by Parliament, would help bring down government holding in state-owned banks below 51 per cent, improve bank governance and enhance investors’ protection, the sources said.
The Parliament session beginning on July 22 would witness the Budget presentation on July 23 and conclude with the passage of the Finance Bill on August 12.
It is to be noted that the government had listed amendments to these laws to be taken up during the winter session in 2021, but these bills could not be tabled. “To effect amendments in Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidental amendments to Banking Regulation Act, 1949 in the context of Union Budget announcement 2021 regarding privatisation of two Public Sector Banks,” as per the list of legislative business for the winter session.
Finance Minister Nirmala Sitharaman, while presenting the Budget for 2021-22, announced the privatisation of public sector banks (PSBs). “Other than IDBI Bank, we propose to take up the privatisation of two PSBs and one general insurance company in 2021-22,” she had said.
In order to guarantee the privatisation of a general insurance company, the General Insurance Business (Nationalisation) Amendment Bill, 2021 was approved by Parliament during the monsoon session that concluded in August of that same year.
The overall number of PSBs decreased from 27 in March 2017 to 12 in April 2020 when the government combined 10 PSBs into four.
According to the amalgamation plan, Punjab National Bank amalgamated with United Bank of India and Oriental Bank of Commerce, creating the second-largest PSB. Canara Bank and Syndicate Bank amalgamated, and Indian Bank absorbed Allahabad Bank. The Union Bank of India was formed by the merger of Corporation Bank and Andhra Bank.
In a first three-way merger, Bank of Baroda merged Vijaya Bank and Dena Bank with itself in 2019. SBI had merged five of its associate banks, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad and Bharatiya Mahila Bank effective April 2017.
(with inputs from PTI)
