Winter session from November 29: Two crucial financial Bills on agenda

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October 27, 2021 8:22 AM

Another Bill to amend the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013, could also be introduced.

Parliament Monsoon Session 2021, Monsoon Session of Parliament 2021 LiveIn the Budget FY22 speech, finance minister Nirmala Sitharaman announced the government’s plan to privatise two PSBs this fiscal.

The government will likely introduce two crucial financial sector Bills, including the one to privatise state-run banks, in the winter session of Parliament, which is expected to be held between November 29 and December 23.
Another Bill to amend the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013, could also be introduced. This will enable the separation of the National Pension System Trust (NPS) from the PFRDA and hike the foreign direct investment limit in the pension sector from 49% to 74%.

Sources said the government may introduce Bills to amend or repeal the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980 (Nationalisation Acts) to facilitate the proposed privatisation of state-run banks. At present, the voting rights cap of 10% for a non-government shareholder irrespective of his stake is a hindrance for the privatisation of public sector banks, the sources said.

In the Budget FY22 speech, finance minister Nirmala Sitharaman announced the government’s plan to privatise two PSBs this fiscal. Sources had earlier said that Central Bank of India and Indian Overseas Bank could be the sell-off candidates, in sync with the suggestions of Niti Aayog.

During the almost month-long session, the government will also seek Parliamentary clearance for the second batch of supplementary demands for grants, which will allow it to undertake additional expenditure, over and above the commitments made in the Budget.

As for the PFRDA Bill, once the amendments are cleared, the NPS will be managed by a board of 15 members, mostly from the government, which is the biggest contributor to the pension corpus. The idea is to maintain an arm’s length relationship between the NPS Trust and the pension regulator.

The powers, functions and duties of the NPS Trust, currently stipulated under the PFRDA (National Pension System Trust) Regulations, 2015, will also come under a charitable Trust. The Trust was set up by the PFRDA to manage the assets and funds under NPS. The government has been weighing the proposal to separate the two functions for the last couple of years.

Moreover, the PFRDA is also proposed to be the regulator of superannuation funds managed by corporate houses for their employees. It is also proposed to relax rules to allow more products other than annuity ones for the investment of 40% of the corpus at the time of exit of subscriber from the NPS. With returns from annuity on the decline (now around 5% per annum), the proposed change would allow investment of the 40% corpus (after 60% is given lump sum at the time of exit) in other products such as systematic withdrawal plans, etc, sources said.

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