Lok Sabha is likely to make amendments in the Banking Regulation Act, introducing some important reforms in the banking sector, on August 22, 2012. The finance minister, P. Chidambaram, will move three bills to amend the Act. These bills include, Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980; Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Banking Laws (Amendment) Bill 2011.
It is reported that the execution of these amendments will bring about certain changes in the banking sector, which is eagerly awaited for by India Inc. The amendments will also give more regulatory powers to the central bank. For instance, it will give Reserve Bank the power to ask the associate enterprises of bank for returns and any other kind of information. RBI would also get the power to inspect the same.
Private sector banks will also be affected by amendments in the Banking Regulation Act. The restriction on the voting rights of private banks, which is presently fixed at 10 percent of the total voting rights of all the shareholders of the bank, is likely to be increased to 26 percent. It is reported that the increase will provide investors more leeway.