New Delhi: The Union cabinet on Thursday decided, for the moment, not to accord SLR (statutory liquidity ratio) to the special marketable securities issued by the government, amounting to Rs9,995.99 crore, to subscribe to a rights issue of the State Bank of India (SBI).
The decision amends a 29 November 2007 cabinet order, which gave SLR status to the rights issue. This would have allowed SBI to meet a part of its SLR requirement by issuing the securities. Under SLR provisions, banks have to park 25% of their deposits in government bonds. The SBI rights issue is due to close on 18 March.
Among other decisions taken on Thursday, the cabinet approved the setting up of a Financial Inclusion Fund (FIF) and a Financial Inclusion Technology Fund (FITF), each with a corpus of Rs500 crore. FIF is intended to support “developmental and promotional activities” to secure greater financial inclusion, especially among weaker sections of society, an official press note said.
FITF is intended to increase investment in IT and stimulate research and technology transfer. The two funds would help provide credit to these sections and businesses, it said.
Meanwhile, the cabinet committee on economic affairs on Thursday approved immediate relief to exporters by providing interest subvention not less than 7% to cushion the impact of “unanticipated and steep rupee appreciation”. The government will spend an additional Rs500 crore during fiscal 2007-08 and 2008-09 to help lower the impact of appreciation of the rupee against the dollar in the past year.
In July and November 2007, the Centre had lowered interest rates and increased the tax refund cap for exporters to ease the impact of the rupee’s value, which rose by more than 12% during the year.
The cabinet also approved introduction of a Bill in the Parliament, which will seek to raise the strength of Supreme Court judges from the current 26 to 31. The decision was taken, an official said, after the number of high court judges rose over a 22-year period, from 424 in 1985 to 877 in 2007.
“After the rise in number of high court judges, a proportional, though not equal, rise is to be expected in the number of Supreme Court judges,” said a government official who did not wish to be identified.
Reacting to the development, a former judge of the Supreme Court, justice Santosh Hegde, said: “Many matters, when they reach the Supreme Court, have already been pending for 15 years. There should not be a further delay due to lack of infrastructure or a shortage of judges.”
In a statement in the Lok Sabha last year, H.R. Bhardwaj, Union minister for law and justice, had said that 40,243 civil and criminal cases were pending in the Supreme Court as on 31 January 2007.
The Centre will spend Rs1.5 crore a year on the salary of the new judges, in addition to a one-time expense of Rs81 lakh, and will also build five new bungalows for their official residences.