BJP to support Banking Bill if forward market contract clause is dropped

The banking amendment Bill is likely to gain Parliamentary approval after the principal Opposition Bharatiya Janta Party signaled its support.

The finance ministry is pushing for the banking, insurance and pension bills to be passed in Parliament this week.

While the breakthrough may end the logjam over the bill, the controversial clause which allows banks to trade in the forwards commodities market may be dropped.

According to a CNBC TV 18 report, the BJP has agreed to all other clauses, barring the forward market contract.

[caption id=“attachment_560208” align=“alignleft” width=“380”] While the breakthrough may end the logjam over the bill, the controversial clause which allows banks to trade in the forwards commodities market may be dropped. AFP[/caption]

Commodity futures trading in India is highly speculative and volatile and banks’ entry into this has been opposed by the Reserve Bank of India as it believes the Forward Markets Commission (FMC), which regulates commodity futures, lacks autonomy and independence.

This clause was not part of the original Bill and was included after the standing committee on finance gave its recommendations. The opposition, led by the chairman of the standing committee on finance, Yashwant Sinha of the BJP, a former finance minister himself, demanded that the Bill be referred again to the committee.

“I can tell you we will oppose the Banking Laws Amendment Bill if the government insists on retaining the clause that allows banks to invest in commodity futures.” Sinha had said earlier.

While Chidambaram has ruled out referring the bill to the standing committee again, the Lok Sabha is now set to consider the Banking Bill as the clause will most likely be dropped.

Last week, Chidambaram met BJP’s Sushma Swaraj and Arun Jaitley, leaders of the opposition in the Lok Sabha and Rajya Sabha, respectively, to seek their support. However, the BJP has so far not issued any official statement on lending their support to the bill.