The government's reform drive has hit another roadblock. The standing committee on finance has rejected the Insurance Amendment Bill and the UIDAI Bill while the Banking Laws Amendment Bill gets only a conditional nod, reports CNBC-TV18’s Economic Policy Editor Siddharth Zarabi.
The insurance FDI hike proposal as far as Parliament is concerned and the standing committee’s concerned is a no-go. The proposed bill looked at hiking FDI in the insurance sector from 26% to 49%. It also looked at allowing insurance companies to access other forms of capital apart from equity. This has not been agreed to by the standing committee on finance.
Sources suggest that a formal rejection will be taken off note today.
On the Aadhaar Bill or the Unique Identification Bill, the committee is going to call for a completely fresh legislation considering all the overlaps and the objections and the serious differences within the government on this matter. They have said that there is too much overlap and inconsistency in the plan. The Planning Commission, Home Ministry, the Expenditure Department and the Ministry of Finance have serious issues with this bill. But there is conditional support for the Banking Laws Amendment Bill including the point about keeping bank mergers outside the purview of the Competition Commission and also doing away with the 10% cap on voting rights.
On that however, the standing committee is suggesting that instead of a fully proportionate voting right in accordance with the shareholding of an investor, that voting right should be capped at 25%. It is of course up to the government to either accept or reject these proposals of the standing committee as they have been in other bills including the Companies Bill. Given the current environment and given the sort of negative stance taken by the opposition as far as FDI is concerned, not just in retail but even in areas like civil aviation and defence, the Insurance FDI Bill for the moment is not going to see the green light for many months to come.