The Hindu Business Line : Cabinet okays amendments to Banking Companies Bill

The Cabinet on Thursday approved amendments to the Banking Companies (Acquisition and Transfer of Undertaking) and Financial Institutions Laws (Amendment) Bill 2005 with a view to providing more flexibility to the board of directors and also improve corporate governance in banks.

This Bill was introduced in the Lok Sabha on August 16 last year. Thereafter it was referred to the Standing Committee of Parliament on Finance for examination. The Committee recommended some modifications to the Bill. The Bill will be introduced in Parliament.

The Amendment Bill will bring the operations of nationalised banks in tune with the changed scenario and modern business practices.

The Cabinet also approved enactment of a new Law on Payment and Settlement Systems Bill, 2006, which seeks to provide for an explicit legal basis for payment and settlement system and their regulation apart from empowering the Reserve Bank of India for such regulation of payment systems. It also seeks to provide a legal basis for all net settlements and to define settlement finality.

The legislation will also provide for a legal basis to recognise clearing houses, legal sanction to netting of payments with receipts, finality of settlement, recognition of service providers and participants, electronic mode of payments and explicit powers of supervision over Securities Clearing and Settlement.

TAP project

The Cabinet also gave its in-principle approval to India's participation in Turkmenistan, Afghanistan and Pakistan national gas pipeline project. The Minister for Parliamentary Affairs, Mr P.R. Dasmunsi, said that with this approval TAP would become TAPI and would include Turkmenistan, Afghanistan, Pakistan and India.

Joining the TAP project would offer India the possibility of an alternative source of natural gas supply. In mid-February, the Steering Committee of TAP had given India three months time for submitting a formal request to join the $3.5 billion. The gas pipeline was expected to flow 110 MSCM of gas per day from 2007.

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