Reforms in 2015: How far have we come
RBI allowed setting up of Payments Banks and Small Finance Banks.
What happened this year
THE RESERVE BANK OF INDIA cut repo rate by 125 basis points. The Centre and the RBI also signed a Monetary Policy Framework agreement in February to maintain price stability and growth. As per the agreement, RBI would set the policy interest rates and would aim to bring inflation below 6 per cent by January 2016 and within a band of 4 per cent with (+/-) 2 per cent for 2016-17 and all subsequent years.
The RBI also allowed setting up of Payments Banks and Small Finance Banks. It accorded in principle nod to 11entities to set up Payments Banks in August and gave approval to 10 entities to form ‘Small Finance Banks’ in September.
APPOINTMENT REFORMS for public sector banks were moved by the government. Now, a seven-member Bank Board Bureau will oversee the appointments process at public sector banks and provide advisory services.
RS 12,000 cr is the amount passed by the Parliament as Supplementary Demand in the current fiscal, in addition to
Rs 7,940 crore already provided in the budget 2015-16 to capitalise the PSU banks. The government plans to infuse Rs 70,000 crore in banks in the next four years.
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National Investment and Infrastructure Fund of Rs 20,000-crore proposed by the finance ministry. The government is open to selecting a private sector candidate to head the Fund. Public sector companies will also contribute equity capital for the corpus.
Minimum alternate tax (MAT) on capital gains made by foreign institutional investors (FIIs) prior to April 1, 2015 to be waived off. The decision is to be carried out through an amendment to the Income Tax Act. The government clarified that MAT provisions will not be applicable to FIIs and foreign portfolio investors not having a place of business/permanent establishment in India, for the period prior to April 1, 2015.
‘Insolvency and Bankruptcy Code, 2015 was introduced in Parliament last Monday. The bill aims freeing up banks’ resources for other productive uses and boosting credit markets by providing for faster liquidation of a company’s assets in case of defaults. As per the proposed legislation, the corporate insolvency would have to be resolved within a period 180 days, extendable by a further 90 days.
Undisclosed foreign asset details of Rs 3,770 crore from 638 declarations received till September 30, the deadline for availing the opportunity under the new black money law introduced earlier in the year. As per the new law — Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 — defaulters were required to pay a penalty and tax of 30 per cent each in return for an assurance of being spared penalties and prosecution.
Foreign investment in banking sector liberalised in November. The DIPP allowed FIIs, FPIs and QFIs to invest up to the sectoral limit of.
74 per cent, provided there is no change of control and management of the invested company.
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