Cabinet approves 49% FDI in insurance, RS test next week

 

Banking, power sector reforms

• The government on Wednesday allowed public sector banks to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52% in phases so as to meet Basel III capital adequacy norms
• Various amendments to the Electricity Act-2003 to promote competition, efficiency in operations and improvement in quality of supply of electricity were also approved
• The Cabinet okayed the plan to set up 25 solar parks each with a capacity of 500 MW and above in various parts of the country.

Sanjeev Sharma

Tribune News Service

New Delhi, December 10

The Narendra Modi 
government on Wednesday in a flurry of decisions encompassing insurance, banking, power sectors unleashed major reforms that will quicken the economic growth in the country. The Union Cabinet, headed by PM Modi, approved the insurance amendment Bill with a composite foreign investment cap of 49% for presenting it in Parliament, incorporating the changes suggested by a House panel.
The Rajya Sabha is likely to take up the Bill for consideration and passage next week.
Earlier today, the Select Committee in its report to the Rajya Sabha had suggested hike in composite foreign investment limit in insurance sector to 49 per cent which would include FDI as well as portfolio investment. Currently, only 26% FDI is allowed in private sector insurance companies. The hike in foreign investment limit is estimated to attract about Rs 25,000 crore of overseas funds in the sector.
In a major boost for the banking sector, the government also allowed public sector banks to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52% in phases so as to meet Basel III capital adequacy norms.
“The quantum of capital support needed by banks is huge, which cannot be funded by budgetary support alone,” an official statement said. If the PSBs are permitted to bring down the government holding to 52% in a phased manner, they can raise up to Rs 1.60 lakh crore from the market.
In a major power sector reform, allowing consumers to choose their discoms, the government approved various amendments to the Electricity Act-2003 as per the proposed Electricity (Amendment) Bill, 2014. The amendments will also promote competition, efficiency in operations and improvement in quality of supply of electricity in the country resulting in capacity addition and ultimate benefit to the consumers. The government also decided to continue interest subvention to PSBs, private sector banks, regional rural banks, cooperatives banks and National Bank for Agriculture and Rural Development (NABARD) to enable them to provide short-term crop loans up to Rs.3 lakh to farmers at 7 per annum during 2014-15.
Six new debt recovery tribunals (DRTs) have been approved at Chandigarh, Bengaluru, Ernakulam, Dehradun, Siliguri and Hyderabad. A study conducted through Indian Banks Association in consultation with all stakeholders, recommended rationalisation of jurisdiction of some DRTs and setting up of six more DRTs. The number of cases pending with DRTs is over 50,000 and cases are increasing.
In a boost for renewable energy, the Cabinet approved the scheme for setting up 25 solar parks each with a capacity of 500 MW and above and ultra mega solar power
projects in various parts of the country where large chunks of land can be spared for this purpose.
THE TRIBUNE