Furore in LS over Banking Bill

Rejecting their charges, Finance Minister Yashwant Sinha said the Government would ensure that public sector character of the banks would be maintained at every cost and that not a single unit would be disinvested. Sinha told the House that the Government had sought legal opinion and consulted the Law Ministry on its legislative competence before bringing the Bill in the Lok Sabha.

The NBFC Bill titled "The Financial Companies Regulation Bill, 2000", introduced by Sinha was in line with the recommendations of the Task Force to streamline the functioning of financial institutions and protect the interest of depositors of financial companies and prohibit acceptance of deposits by incorporated bodies. It emphasis on the need for constitution of an Advisory Council consisting of Deputy Governor, RBI, as the chairperson and other members of the Council to advise and make recommendations on matters referred to it by the RBI.

Contesting the Opposition charge that the Vajpayee Cabinet was taking decision on major policy issues in a hurry, Sinha said he had made it amply clear in the Budget speech regarding Government’s intention to implement the report of the Narasimhan Committee on banking reforms which recommended reduction of equity to 33 per cent.

"The move will not involve disinvestment of even a single unit of the Government. The public sector character of the banks will remain intact," the minister said. He recalled that the report of the Narasimhan Committee, appointed by the then United Front Government, had presented its report to the Vajpayee Government in April 1998, suggesting that banks should recapitalise, reach international standards and expand their equity base.

Sinha also said the Constitution did not lay down that banks should be confined only to the public sector as otherwise private banks could not have existed between 1950 and 1969 when they were nationalised by Indira Gandhi. Initiating the discussion, Basudeb Acharia (CPI-M) said the proposed legislation would allow the banks to approach the capital market leading to their capture by multinationals.

Acharia said the reduction of Government’s equity in the banks would be an "unconstitutional" move since it would lead to dilution of the socialist character enshrined in the preamble of the Constitution. Demanding that the Bill be withdrawn, CPI-M members Lakshman Seth, Moinul Hassan, Rupchand Pal, Ram Chandra Dome and Suresh Kurup said multinational companies after buying Government equity in banks would ignore the rural credit system affecting the farmers, self-sufficiency in food and small and cottage industries.

Congress members P R Dasmunsi and Madhavrao Scindia said their party would oppose the Bill "tooth and nail" and maintained that it was not binding on the Government to implement recommendation of the Narasimha Committee report. The Opposition members said the Government would lose their hold on the banks as the majority of the directors on the board would be from the private sector. At one stage, the Finance Minister had even suggested that the Bill be referred to the Standing Committee on Finance to get its views on it.

AIBEA to hold demonstration

MUMBAI: All India Bank Employees Association (AIBEA) will hold a nation-wide demonstrations tommorrow to protest against the banking bill introduced by the government in Parliament. "AIBEA members will hold demonstrations after business hours tommorrow outside respective banks to protest against the Bill," Suresh Dhopeshwarkar, AIBEA secretary said here today.

He said similar demonstration was also planned in Mumbai on December 15, and claimed AIBEA had a strength of six lakh including one lakh members in Maharashtra. "Depending upon the movement of the Bill, a possibility of a strike was not ruled out," he said. AIBEA would approach the constituents of United Forum of Bank Unions, umbrella orgainsation of bank unions, and central trade unions to garner their support, he said.

The association would also meet MPs belonging to all political parties on December 16 and 17 to request them to oppose the bill, Dhopeshwarkar said. "The bill was seeking to reverse the nationally accepted policy of developing a self-reliant economy for the country," he added.