Cabinet allows raising pvt bank voting rights to 26 pct

New Delhi: The cabinet approved raising voting rights of stakeholders in private banks to 26 percent from 10 percent, Information and Broadcasting Minister Ambika Soni said on Thursday, in a long-awaited boost for the banking sector.

“The cabinet has cleared banking laws (Amendment Bill 2011). It also approved increase of voting rights from 10 percent to 26 percent for private-sector banks,” Soni told reporters after a cabinet meeting.

[caption id=“attachment_290316” align=“alignleft” width=“380” caption=“The cabinet approved raising voting rights of stakeholders in private banks to 26 percent from 10 percent. Reuters”]  [/caption]

With the government staring at a slowing economy, triggered by a lack of reforms, the announcement could bring some cheer to investors, but needs to be cleared by parliament.

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The Banking Laws (Amendment) Bill 2011, introduced in the Lok Sabha in March 2011, had proposed providing voting rights to investors commensurate with their shareholding in the private sector banks.

The Committee in its report on the Banking Laws (Amendment) Bill 2011 tabled in the Lok Sabha had suggested the RBI must ensure that regulatory mechanism is adequate and strictly complied with to prevent any misuse of the provision of increasing the limit.

It had recommended that RBI, being the nodal agency in the banking sector, should conduct due diligence of “fit and proper persons/entities…”.

Agencies