The Union Cabinet on Thursday gave its nod to the long-awaited Pension Fund Regulatory and Development Authority Bill (PFRDA) that aims to grant statutory status to the pension regulator and open up the sector for foreign direct investment. The Cabinet also cleared the State Bank of India (Subsidiary Banks Laws) Amendment Bill, which proposes to transfer certain powers vested with the Reserve Bank of India, with regard to its subsidiaries, to the central government.
“The PFRDA Bill has been approved and is likely to be introduced in the current session,” said a Union minister, after a Cabinet meeting chaired by Prime Minister Manmohan Singh. If the Bills are not introduced in the current session, they may be tabled in a special session to be convened in end of May or in the Monsoon Session (July-August). The Bill seeks to allow foreign direct investment in pension funds, in line with the insurance sector, in which FDI up to 26 per cent is allowed.
PFRDA, which was set up as a regulatory body for the pension sector, is yet to get statutory powers, since the Bill pertaining to that effect lapsed in Parliament with the dissolution of the last Lok Sabha in 2009. An interim PFRDA has been functioning since 2003 through an executive order.
The PFRDA Bill was first introduced in Parliament in 2005 and referred to the parliamentary standing committee which submitted its report and recommended that FDI in pension should not be at variance with the insurance sector. An amendment to the Insurance Bill, which seeks to raise foreign investment cap in domestic private insurance companies to 49 per cent, is also pending.
The State Bank of India (Subsidiary Banks Laws) Amendment Bill seeks to amend the State Bank of Hyderabad Act, 1956 and the State Bank of India (Subsidiary Banks) Act, 1959.
The amendment will reflect the transfer of ownership of State Bank from the Reserve Bank to the central government.
The Bill seeks to empower the government to fix the authorised capital of SBI subsidiaries and appoint managing directors. It will also fix the terms of office, salaries and allowances of managing directors of the subsidiaries by the government. The
Bill had earlier lapsed with the dissolution of the 14th Lok Sabha.
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India at present is only looking to converge with this set of norms through Indian Accounting Standards (Ind AS)