Uncertainty over the privatisation of two public sector banks and regulation of crypto assets continue, as the government has not included these two in the list of Bills to be introduced during the monsoon session starting on Monday.

Finance Minister Nirmala Sitharaman, in her budget speech for the fiscal year 2021-22 said, “We propose to take up the privatisation of two public sector banks and one general insurance company in the year 2021-22. This would require legislative amendments and I propose to introduce the amendments in this Session itself.”

Since then, four sessions of the Parliament have gone but the Bill is yet to be brought.

Many issues yet to be resolved

It appears that various issues including total exit or retaining partial stake are yet to be resolved. Also, considering the current extreme volatility in the global financial market, the government is yet to take a call on the timing. The consultation process with stakeholders, such as bank unions, has not yet been completed.

Last month, a top Finance Ministry official said that the government is working on the legislation. However, the draft Bill has not been presented before the Cabinet yet.

The government did list ‘The Banking Laws (Amendment) Bill, 2021’ for the Winter Session last year. The purpose of the Bill was to effect amendments to the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980, and incidental amendments to the Banking Regulation Act, 1949 in the context of Union Budget announcement 2021 regarding privatisation of two public sector banks.

However, it was neither taken up in that session nor the next session. Crypto regulation

Working on a consultation paper

Bill to regulate crypto is also yet to be finalised. Officials from the Finance Ministry say a consultation paper is in the process of being prepared, and once stakeholder consultation is completed, a bill can then be drafted, brought to the Cabinet, and then tabled in Parliament.

Budget for FY23 proposed tax on ‘Virtual Digital Asset (VDA)’ popularly known as crypto. Finance Minister Sitharaman did clarify that taxation does not mean granting legality and regulatory structure to be announced.

A Bill titled the ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ was listed twice (Budget Session and Winter Session of 2021) but could not be introduced.

According to Lok Sabha Bulletin, the Bill aimed at creating a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India”. The Bill also seeks to prohibit all private cryptocurrencies in India; however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.

An amendment has already been carried out in the Reserve Bank of India Act 1934 to expand the definition of the bank note by including notes issued in digital form and also prescribe non-applicability of certain provisions such as denomination, form, re-issue, etc. to digital form of bank notes.

This means the ground is now ready for the issue of digital currency and the only issue left is the regulation of VDA.

Key economic Bills for the Monsoon Session
  1. Development of Enterprises and Services Hubs (DESH) Bill, 2022: Seeks to revise the Special Economic Zones Act and to frame Rules
  2. Multi-State Cooperative Societies (Amendment) Bill, 2022: Seeks to rationalise government role, enable cooperative societies to compete in the new economic environment, and to raise resources more effectively by promoting functional autonomy and professionalisation and protecting the interest of the depositors/members from the vested interest and mismanagement of the Multi-State Cooperative Societies.
  3. Warehousing (Development and Regulation) (Amendment) Bill, 2022: Seeks to help farmers to store their produce in scientific warehouse godowns.
  4. Competition (Amendment) Bill, 2022: Seeks to carry out certain essential structural changes in the governing structure of the CCI and changes to substantive provisions to address the needs for new age markets.
  5. Insolvency and Bankruptcy Code (Amendment) Bill, 2022: Introducing provisions on Cross Border Insolvency among others.