UPA gives in, drops commodity trade clause from banking bill

The government today confirmed that it will drop the controversial clause, which allowed banks to trade in commodity futures, from the banking bill pending in parliament, Finance minister P Chidambaram said in Parliament today.

“Will not press for commodity trading clause.. have given notice for dropping forward contract clause,” Chidambaram said in Parliament today.

Even Parliamentary Affairs Minister Kamal Nath confirmed that the Forwards Contract clause will be dropped.

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Opposition to the clause threatened to stall the passing of the bill, which is aimed at drawing foreign investment into the banking sector and increasing the Reserve Bank of India’s (RBI) regulatory oversight in local banks.

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“We are dropping the future clause in the banking amendment bill,” Nath said.

The bill could be voted on in the lower house of parliament as soon as Tuesday.

On Monday, Firstpost had reported that the Opposition led by the Bhartiya Janta Party was willing to lend support to the bill if the futures contract clause was dropped.

The government is seeking parliamentary approval for amendments aimed at attracting more foreign investment into the banking industry, in the latest move by Prime Minister Manmohan Singh to open up India’s economy.

Finance Minister P Chidambaram had reached out to Sushma Swaraj and Arun Jaitley the leaders of the opposition in the Lok Sabha and the Rajya Sabha respectively, last week over the contentions issue.