As part of the reforms in the banking sector introduced in 1993-94, capital was infused in the banks by issue of special securities.
To date, the Government has injected Rs 16,809 crore into nationalised banks. Adding the perpetual securities issued earlier, the total net capital support stands at Rs 22,808 crore. Thanks to the capital support, a sound banking sector meeting international norms has emerged.
More money to lend
We have reached a stage when we can wind up the special arrangements between the Government and the banks. Accordingly, after consulting the RBI, I propose to unwind the special securities through conversion of these non-tradable special securities into tradable, SLR Government of India dated securities. This will facilitate increased access of the banks to additional resources for lending to the productive sectors in the light of the increasing credit needs of the economy.
Honourable Members are aware that the K.P. Narasimhan Committee was appointed to recommend a comprehensive law on insurance. The report of the committee has been received, and is being examined by the Insurance Regulatory and Development Authority and the Government. I intend to introduce a comprehensive Bill on insurance in 2006-07. Important Bills to amend the banking laws and for setting up the Pension Fund Regulatory and Development Authority are before the Parliament. The Standing Committee on Finance has recommended these Bills. I would urge Honourable Members to cooperate with the Government and pass these Bills.
Liberal FII norms
In recent months, the capital market has attracted a great deal of attention. The measures taken in the last year-and-a-half have deepened, broadened and strengthened the market. It is necessary to take more measures. Hence, I propose to
Consultations have been held in this behalf with the RBI and SEBI, who will issue the guidelines in due course.
Deepening debt market
The RBI had introduced the anonymous electronic order matching trading module called NDS-OM on its negotiated dealing system. In the first phase, RBI-regulated entities, banks and primary dealers were allowed to trade on the system. The system has now been extended to all insurance entities. In view of the encouraging response of market participants and to further deepen the Government securities market, it is proposed to extend access to qualified mutual funds, provident funds and pension funds.