The Hindu Business Line : Cabinet gives ex-post facto nod for change in banking Bill

The Union Cabinet, on Thursday, gave its ex-post facto approval for modifying the Banking Companies Bill 2005 to allow the Reserve Bank of India to recommend a person, other than an officer of the central bank, for appointment as a director in the board of public sectors banks.

While the Lok Sabha passed the Banking Companies (Acquisition and Transfer of Undertakings) and Financial Institutions Laws (amendment) Bill 2005 on August 23, the Rajya Sabha passed this Bill on the next day.

Allaying apprehensions in certain quarters that RBI nominee in public sector boards may be eased out through the Banking Companies Bill 2005, the Finance Minister, Mr P. Chidambaram, had then said that "an additional amendment" was being introduced to ensure that RBI continued to have a say in such appointment.

As the Bill was to be taken up during the monsoon session of Parliament and there was paucity of time, this amendment was introduced in the Bill with the approval of the Prime Minister and in anticipation of Cabinet approval.

Prior to this amendment, the provision on RBI nominee to the boards of public sector banks provided for appointment of "one director who is an officer of Reserve Bank of India to be nominated by the Central Government on the recommendation of the Reserve Bank of India".

However, the amendment, which replaced the earlier provision, provided for appointment of "one director with necessary expertise and experience in matter relating to regulation and supervision of commercial banks to be nominated by central government on recommendation of RBI".

More Stories on : Financial Policy | Public Sector Banks

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