Financial sector reforms in FY17: Road map in the works for state-run banks
As the finance minister gears up to present the Union Budget for the new financial year, Business Standard scans the 2016-17 Budget speech for a status check on key announcements made by Finance Minister Arun Jaitley last year regarding financial sector reforms and assesses how much has been achieved. Passage of the Insolvency and Bankruptcy law Status: In May last year, Parliament passed the Insolvency and Bankruptcy law code 2016.
Code on Resolution of Financial Firms to be introduced as a Bill in the Parliament during 2016-17 Status: A draft Bill has been finalised by the finance ministry and put in the public domain for comments. The government is in the process of reviewing the comments received. The RBI Act, 1934, is being amended to provide statutory basis for a Monetary Policy Framework and a Monetary Policy Committee through the Finance Bill 2016 Status: The amendment to the RBI Act of 1934 was passed in the Finance Bill 2016. Subsequently, the six-member monetary policy committee was formed with three external members appointed by the government. The RBI governor, the deputy RBI governor in charge of monetary policy and an RBI official are the other three members of the committee. A Financial Data Management Centre under the aegis of the Financial Stability Development Council (FSDC) will be set up to facilitate integrated data aggregation and analysis in the financial sector Status: A committee headed by Ajay Tyagi, additional secretary in the finance ministry has submitted its report and a draft bill titled ‘The financial data management centre bill 2016’ to the government. Amendments in the SARFAESI Act, 2002, to enable the sponsor of an ARC to hold up to 100 per cent stake in the ARC and permit non-institutional investors to invest in securitisation receipts Status: The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 was passed by Parliament in August. It amended four laws: Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996.
Proposed to bring in comprehensive legislation in 2016-17 to deal with the menace of illicit deposit taking schemes Status: Instead of a law, the government formulated the Direct Selling Guidelines 2016 framework model guidelines for states to emulate and curb ponzi schemes and regulate direct selling. The Bank Board Bureau will be operationalised during 2016-17 and a road map for consolidation of public sector banks will be spelt out Status: The road map for consolidation of public sector banks is yet to be put in the public domain. General insurance companies owned by the government will be listed on the stock exchanges Status: In mid-January 2017, the cabinet committee on economic affairs gave the go-ahead for listing of shares of five general insurance companies. The five insurance companies are New India Assurance, United India Insurance, Oriental Insurance, National Insurance, and General Insurance Corporation of India. Article By – Business Standard