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Banking Amendment Bill strengthens RBI, curtails CCI

The government yesterday passed the Banking Laws Amendment Bill 2011 as part of the financial reforms promised during this year’s budget in several key sectors, with a new amendment that is set to ban the Competition Commission of India (CCI) from having to approve mergers and amalgamations.

The bill that has been brought to amend the Banking Regulation Act 1949 would also pave the way for the Reserve Bank of India (RBI) to allot additional banking licenses, which is in tune with the finance minister’s budgetary proposals, according to media reports.

Key amendments proposed in this bill are:

Voting caps for private sector banks removed to make such rights commensurate with economic ownership, reported the Hindu.

CCI’s nod for mergers and amalgamation in banking sectors may no longer be required.

RBI would be given more rights – will be authorised to supersede the board of a private sector bank in consultation with the central government. Would be empowered to inspect associate companies of an enterprise or a banking entity, associate companies could include subsidiaries, a holding company or any joint-venture of a bank.

The Insurance Laws (Amendment) Bill 2008, the Life Insurance Corporation (Amendment) Bill 2009, the Pension Fund Regulatory and Development Authority Bill, the State Bank of India (subsidiary banks laws) Amendment Bill 2009 and the SARFAESI Act 2002 were some of the other important legislations proposed for amendment in the budget speech.

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