India against bank tax, says Mukherjee

I / Washington June 23, 2010, 15:07 IST

Taxing the banks for future bailouts is only a "compromise formula", as a section of G-20 members, including India, is against any such levy, Finance Minister Pranab Mukherjee has said.

"That was the compromise formula, because a section of the meeting that felt that there is no need of having any taxation as such," Mukherjee told PTI in an interview.

He was referring to the Busan G-20 communique earlier this month where it was proposed that financial institutions contribute towards governments' measures to spur economies.

"If there are well placed regulations that can take care of this problem. The health of the banks can be protected," Mukherjee said when asked if this issue would again be discussed in the G-20 Summit in Toronto on June 26-27.

Asked what role he sees for India in G-20, Mukherjee said, "India has been a great stabilising force and it is the second fastest growing economy. Secondly, we have taken initiative for the reform of international financial institutions."

"We are urging for the greater voice and percentage share of the emerging economies, which has been recognised by the enhanced capital increase in the World Bank and the International Monetary Fund," he said.

The World Bank in April announced shifting of 3 per cent voting power in favour of developing countries, bringing their total stake to 47 per cent in the multi-lateral agency. India became the seventh largest shareholder in the World Bank following this shift.

Finance Ministers and central bank governors of the 20 developed and developing countries met in South Korea on June 4-5 to find ways for the recovery of the global economy.

Taking forward the finance ministers meeting, leaders of the 20 nations would meet in Toronto and would also discuss on reforming the regulation of the financial sector.