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Journalism of Courage
In a bid to attract FDI in banking sector, government decided on Tuesday to remove the 10 per cent ceiling on voting rights of foreign investors in banks and make it in proportion to the equity-owned by the shareholders.
The decision was taken at a meeting of the Cabinet and a bill to amend the Banking Regulation Act, 1949 will be introduced in the post-recess Budget session of Parliament, Parliamentary Affairs Minister Sushma Swaraj said here.
She said sub-Section II of Section 12 of the Act will be amended to allow voting rights in proportion to the shares held by foreign investors. She said this is in line with the announcements made in this year’s Budget speech of Finance Minister Jaswant Singh.
She recalled that Singh in his speech had proposed enhanced FDI limit in private sector banks upto 74 per cent from all sources against the present 49 per cent.
The move to remove voting restriction is part of the ongoing banking reforms and in keeping with the hike in FDI limit. The present ceiling of 10 per cent on voting rights for the foreign stakeholders is irrespective of shareholding of investors. gn stakeholders is irrespective of shareholding of investors.
The banks, now starved of technological inputs, and investors, particularly the foreign entities in private sector banks.Many leading players, including Standard Chartered Bank, Bank of Nova Scotia and Citibank had been pitching hard for relaxation. Singh also proposed to set up subsidiaries of foreign banks.
