Budget proposals don't seek privatisation of state-owned banks: DEA Secy

Finance Minister announced that to simplify, ease and reduce cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations

The Budget’s proposed banking amendments will improve governance and protect investors and they must not be seen as efforts for the privatisation of public sector lenders, said a senior civil servant on Wednesday.

“These are the different sets of measures as over time, things have changed and the banking regulation act has to be aligned with the present day needs about the qualification of the directors and their tenure,” said economic affairs secretary Ajay Seth at a post-Budget press conference.

Finance Minister Nirmala Sitharaman speech said in her Budget speech: “To improve bank governance and enhance investors’ protection, certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act are proposed.”

She also announced that to simplify, ease and reduce cost of compliance, financial sector regulators will review existing regulations. “For this, they will consider suggestions from public and regulated entities. Time limits to decide the applications under various regulations will also be laid down,” she said.

Seth said the regulators consider the review the part of a regular exercise. “Regulations are what the economy needs today and whatever tweaking is required, the regulators will take their own steps,” he said.

Sitharaman also proposed setting up of a national financial information registry to serve as the central repository of financial and ancillary information. “This will facilitate efficient flow of credit, promote financial inclusion, and foster financial stability. A new legislative framework will govern this credit public infrastructure, and it will be designed in consultation with the RBI,” she said.