Banking Laws (Amendment) Bill, 2011

The Banking Laws (Amendment) Bill, 2011 has been cleared by the Lok Sabha.

The bill is considered to be the most important financial legislation since the reforms in 1991. The bill will enable the Reserve Bank of India (RBI) to issue licenses to new banks. Also, it will help open up new avenues for infusing capital into the banking system. Overall, the bill strengthens the role of RBI in the Indian banking system.

Here are some of the important aspects of the bill:

• The bill gives more powers to RBI
• The RBI can now supersede board of a bank in key decisions
• Voting rights of shareholders in banks would be increased
• RBI will act as a banking regulator
• Competition Commission of India (CCI) will regulate Mergers and Acquisitions

Industrial houses would now be able to get licences to operate banks. The bill will allow easier flow of investments from both domestic as well as foreign players.