Hong Kong: India’s ruling coalition has the support to push through three major reforms in the banking, insurance and pension sectors in the next parliamentary session, minister of state for finance Pawan Kumar Bansal said on Friday.
“The numbers are enough for us to carry through the legislation. We would like to clear all this in the next session,” Bansal said.
He also said the country would have a good crop this year that would have a cooling effect on inflation, which rose to the highest level since 1995.
Bansal said there is a plan to remove a voting rights limit of 10% faced by foreign investors in private sector banks and make voting rights commensurate with shareholdings. He also expects to rejuvenate the insurance sector by raising the limit on foreign direct investments (FDI) to 49% from 26%.
“There is a comprehensive legislation prepared, including a plan to raise the FDI limit to 49% to get more investment in the insurance sector where the potential is immense and there is low penetration.”
The third reform would allow foreign funds to hold up to 26% in ventures with Indian firms. They are excluded now.
He said monetary tightening measures by the Reserve Bank of India (RBI) had a manageable impact on banks’ profitability. “Some impact has been felt of the RBI’s measures on banks’ profitability when they did not pass on the increased costs. But they are in a position to take that.”