Banking Regulation Bill introduced

A bill seeking to give more operational flexibility to the Reserve Bank of India in the conduct of monetary policy was introduced in Lok Sabha on 9th March 2007 by the finance minister, P Chidambaram.

The Banking Regulation (Amendment) Bill proposes to replace an ordinance promulgated on January 23 this year. The ordinance seeks to amend section 24 of the Banking Regulation Act, 1949 to enable the RBI to specify the Statutory Liquidity Ratio without any floor rate.

Changes proposed in section 53 of the Act will make it mandatory to present draft notification before both Houses of Parliament in cases of exemptions being granted to institutions, banks or branches located in Special Economic Zones (SEZs).

Chidambaram said it was necessary that the RBI, as the regulator and the authority vested with the powers to conduct monetary policy, has the necessary flexibility regarding stipulation of holding of liquid instruments by banks.

Floor limit on SLR of banks was removed in January 2007, by an presidential decree and the government was required to move a bill within six months under the law ... Read more.

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