Corporate India today welcomed the passage of the Banking Amendment Bill, which aims at drawing foreign investment to the banking sector by increasing shareholders' voting rights, among other things.
Here are some reactions from India Inc:
Naina Lal Kidwai, FICCI President
It is an important piece of legislation that will the foundation for many reforms in the banking sector. This will help expand the reach of banking services to the financially excluded.
N Sivaraman, president of L&T Finance Holdings
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"As far as superseding rights that RBI has sought for itself, I don’t think it should be wholly put in the context of the business houses. It is in overall context of making sure that banks continue to remain robust and are well managed on a regular basis. I think that is what seems to be the most important aspect for the RBI. For an NBFC which is large enough today, becoming a bank is a natural evolution. We have to look at the economics of operating under the guideline that will emerge, that is something we have to see. We see it as a way of growing out portfolio of services and also our client base."
Romesh Sobti, MD and CEO of IndusInd Bank
(On voting rights) Yes, I think that was a sore point with most promoters, that if you owned 50 per cent of the bank, your voting right would be restricted to 10 per cent and I think this has paved the way for more stability in banks because if an outside investor had 10 per cent, his voting right would be the same as the promoter. So, I think that is certainly a matter of relief, and it is certainly equitable. Voting rights should be in line with beneficiary ownership that anybody has in a bank. Today, institutions cannot hold more than 5 per cent; there are promoters, who certainly hold more than 10 per cent; their voting rights were restricted and not in line with the beneficial ownership. Say a Kotak Mahindra bank, their (promoter) ownership would be more than 40 per cent while voting right would just be 10 per cent. So I think, in the first place, it does benefit the promoters.
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