Debt recovery Bill gets Lok Sabha nod after Opposition walk-out

A determined Opposition on Monday thwarted the Banking Laws (amendment) Bill 2012 in the Lok Sabha, raising doubts about its being passed in the coming days. This Bill was listed for consideration and passage in the Lower House on Monday.

Monday was, however, a mixed day for banking reforms, with Finance Minister P. Chidambaram succeeding in getting a Bill on debt recovery passed by the Lok Sabha. The Bill (recovery of debts) was passed after the entire Opposition staged a walkout over it not having been referred to the Standing Committee. On the Banking Laws (amendment) Bill, senior Bharatiya Janata Party leader Yashwant Sinha demanded that three new provisions sought to be introduced by Chidambaram be first referred to the Standing Committee on Finance.

Tantamount to new Bill

Sinha contended that the new provisions are tantamount to bringing a “completely new Bill” and there was a precedent in the Lower House (in the case of Companies Bill) to refer any such new provisions also to the Standing panel.

The Lok Sabha was adjourned for the day after an uproar on this matter. Later, Chidambaram came down heavily on the Opposition for blocking his efforts in getting the Bill passed in the Lok Sabha.

“This is an unprecedented objection in the history of Parliament”, Chidambaram told reporters outside Parliament, soon after the day’s proceedings were adjourned on the issue.

One of the new amendments proposed by Chidambaram related to lifting the ban on banks engaging in forward trading in commodities on a proprietary basis, sources said.

The Banking Regulation Act prohibits a bank from dealing (directly or indirectly) in the buying, selling or bartering of goods, except in connection with the realisation of security held by them.

Currently, banks are allowed to extend finance to commodity traders and to take an equity stake in commodity exchanges. But they cannot engage in forward trading in commodities. The Banking Laws (amendment) Bill is historic as it proposes several big-ticket reforms, including raising the limit on shareholders’ voting rights in private and public sector banks and granting the Reserve Bank of India additional supervisory powers.

The enactment of this Bill is crucial for the Government, as it would pave the way for the RBI to issue new banking licences to the private sector.


In his reply to discussions on the amendments moved on the Enforcement of Security Interest and Recovery of Debts Laws (amendment) Bill, Chidambaram admitted that bad loans (non-performing assets) were a problem.

“NPAs were under control when the economy was doing well. We are now going through difficult times. This is reflected in the rising gross NPAs. But our net NPAs are under control”.

Chidambaram also said there was no reason to think the banking system was in difficulty.

(This article was published on December 10, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.