Key bills for reforming the financial sector, including the Banking Regulation Amendment Bill and the Pension Fund Regulatory Development Authority (PFRDA) Bill, are unlikely to see the light of the day in the forthcoming winter session of Parliament.
The government is prepared to enact only two bills in the winter session, one to regulate microfinance firms and the other to reduce government stake in the State Bank of India (SBI), a senior finance ministry official has said.
The department of financial services is preparing Cabinet notes on the microfinance bill and the SBI Amendment Bill, and they will shortly be placed before the Cabinet for approval.
Other six bills in the banking and financial services, including the PFRDA Bill, Banking Regulation Amendment Bill and insurance reforms bill, will have to wait for the time being, said a finance ministry official who requested anonymity.
The Banking Regulation Amendment Bill involves aligning voting right in private banks with the shareholding while the insurance bill proposes raising the foreign direct investment ceiling in the sector to 49%. The government needs more time to iron out the differences of opinion voiced by various stakeholders, including financial sector regulators and trade unions, on the issues, the official said.
The microfinance bill seeks to entrust the function of development and regulation of the microfinancial sector to the National Bank for Agriculture & Rural Development. The microfinance bill got delayed as the Left parties wanted a cap on interest rates that these institutions could charge.
There will be certain changes in the bill from the earlier one as the sector has become more mature over time, the official said. This committee on regulation of investment advisors headed by PFRDA chairman D Swarup said this month that the Micro Financial Sector (Development and Regulation) Bill, to be tabled in Parliament soon, will address the problems related to the sales of microcredit products.
The SBI Amendment Bill is expected to allow the governments stake in the countrys largest bank to fall to 55% from the current 59.41%. At the current valuation, this 4.41% is worth close to Rs 5,000 crore, another official in the finance ministry told ET. With this bill becoming law, the bank will be in a position to raise money for further growth.