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What is Banking Laws (Amendment) Bill?
The Banking Laws (Amendment) Bill is a key bill aimed to bring reforms in India’s banking sector. It will facilitate the privatisation of two public sector banks (PSBs) as part of an ambitious disinvestment plan. The bill is expected to lower the minimum government holding in the PSBs from 51% to 26%.
About the bill
As per the intent of the bill, amendments will be made in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980 and the Banking Regulation Act, 1949. Reportedly, the government think-tank NITI Aayog has proposed the names of Indian Overseas Bank and Central Bank of India for privatisation in the latest round.
Timeline of events
Union Finance Minister Nirmala Sitharaman announced the privatisation of public sector banks during the presentation of Union Budget 2021-22. It was part of the government’s planned disinvestment drive to earn Rs 1.75 lakh crore. The government was expected to introduce the bill in the previous two sessions of the parliament but the plan was deferred amid countrywide protests by bank unions.
Criticism of the bill
Bank unions across the country have, time and again, objected to the privatisation of public sector banks in India. Bank unions and critics of the bill say that it would lead to social injustice and denial of reservation to the backward classes of the society. Bank unions further say that it would be an undue advantage to the private players.
India’s privatisation record
In the 2019-20 Budget, India’s disinvestment revenue was estimated at Rs 1.05 lakh crore but was later reduced drastically to Rs 65,000 crore. Eventually, the actual disinvestment amount was Rs 50,298.64 crore during that fiscal.
Similarly, the government projected disinvestment receipts at Rs 2.10 lakh crore in Budget 2020-21, but managed to collect under Rs 20,000 crore through disinvestment.
About the bill
As per the intent of the bill, amendments will be made in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980 and the Banking Regulation Act, 1949. Reportedly, the government think-tank NITI Aayog has proposed the names of Indian Overseas Bank and Central Bank of India for privatisation in the latest round.
Timeline of events
Union Finance Minister Nirmala Sitharaman announced the privatisation of public sector banks during the presentation of Union Budget 2021-22. It was part of the government’s planned disinvestment drive to earn Rs 1.75 lakh crore. The government was expected to introduce the bill in the previous two sessions of the parliament but the plan was deferred amid countrywide protests by bank unions.
Criticism of the bill
Bank unions across the country have, time and again, objected to the privatisation of public sector banks in India. Bank unions and critics of the bill say that it would lead to social injustice and denial of reservation to the backward classes of the society. Bank unions further say that it would be an undue advantage to the private players.
India’s privatisation record
In the 2019-20 Budget, India’s disinvestment revenue was estimated at Rs 1.05 lakh crore but was later reduced drastically to Rs 65,000 crore. Eventually, the actual disinvestment amount was Rs 50,298.64 crore during that fiscal.
Similarly, the government projected disinvestment receipts at Rs 2.10 lakh crore in Budget 2020-21, but managed to collect under Rs 20,000 crore through disinvestment.
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