Govt proposes changes in Banking Regulation Act, other laws to enhance investors’ protection

To improve bank governance and enhance investors’ protection, Finance Minister Nirmala Sitharaman on Wednesday proposed certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act.

In her Budget speech, the finance minister said reforms in the financial sector and innovative use of technology have led to financial inclusion at scale, better and faster service delivery, ease of access to credit and participation in financial markets. “This Budget proposes to further these measures,” she said. Fintech services in India have been facilitated by the digital public infrastructure including Aadhaar, PM Jan Dhan Yojana, video KYC, India Stack and UPI, she noted.

Also read: WhatsApp bans 36.77 lakh accounts in India in December

To enable more fintech innovative services, the scope of documents available in DigiLocker for individuals will be expanded, she added. To facilitate certain strategic disinvestments, it is proposed to allow carry forward of accumulated losses and unabsorbed depreciation allowance in the case of amalgamation of one or more banking company with any other banking institution or a company subsequent to a strategic disinvestment, if such amalgamation takes place within 5 years of strategic disinvestment.

It is also proposed to modify the definition of strategic disinvestment’. The announcement will help in the strategic disinvestment of IDBI Bank. The government and the LIC are together selling about 61 per cent stake in IDBI Bank. The Centre has received multiple Expressions of Interest (EoIs) for the same. Potential investors had sought tax benefits on the accumulated loss which would accrue to the acquiring entity in case of its merger or amalgamation with IDBI Bank. The government hopes to conclude the strategic stake sale of IDBI Bank in the next fiscal.