Monday, May 9 2005 14:29 Hrs (IST) - World Time -

New Delhi: Government will soon introduce three bills in Parliament that intend to give a big push to banking reforms and increase FDI in private banks.

While two bills pertain to amendments in Banking Regulation Act (BR Act) of 1949 and the Reserve Bank of India Act (RBI Act) of 1934, the third one is Credit Information Companies (Regulation) bill of 2004, a Finance Ministry official said in New Delhi today (May 9, 2005).

Finance Ministry officials held consultations with their counterparts in Parliamentary Affairs Ministry this morning so that the bills could be tabled by this week.

The Cabinet has approved the bills last week and they are expected to be introduced anytime, he said.

The urgency for introducing the bills assumes importance as amendments to BR Act and RBI Act will give operational flexibility to the Reserve Bank to revise Statutory Liquidity Ratio and Cash Reserve Ratio of commercial banks, which will release more funds for productive purposes and is expected to lower the lending rates.

At present, the two Acts restrict banks to keep Government securities worth at least 25 per cent of their deposits as SLR. The RBI also cannot reduce CRR below 3 per cent as stipulated in the Act.

The amendments will remove the 10 per cent limit of voting rights of foreign investors in private banks and make it proportional to their shareholding.

This will also attract more FDI and encourage foreign banks to take over financially weak private banks in India.

The bill may, however, retain the 10 per cent limit on voting rights of foreign stakeholders in the case of PSU banks.