New Delhi, March 1 (IANS) With an eye to growth through economic reforms, the government hopes to introduce at least seven financial legislations that found mention in Finance Minister Pranab Mukherjee’s budget speech. Following is a brief description and current status of these bills:
* The Insurance Laws (Amendment) Bill, 2008: Currently, the percentage of foreign holding in insurance companies is capped at 26 percent. This bill raises this limit to 49 percent. It allows for nationalised general insurance companies to raise funds from the capital markets and allows entry of foreign re-insurers.
In addition, the bill permits the policyholder to name the beneficiary, while allowing an insurer to decline such a transfer.
The bill was introduced in the Rajya Sabha in December 2008 and was referred to the Standing Committee on Finance in September 2009. The committee is yet to submit its report.
* Life Insurance Corporation (Amendment) Bill, 2009: It amends the LIC Act, 1956 and proposes an increase in the paid up equity capital of LIC to Rs.100 crore from Rs.5 crore so that it meets the capital requirements as specified by the Insurance Regulatory and Development Authority (IRDA).
Currently, the LIC Act provides for the central government to guarantee the entire amount assured by life insurance policies.
The bill permits the central government to determine the extent of the guarantee. It was introduced in the Lok Sabha in July 2009 and was referred to the Standing Committee on Finance, which submitted its report in March 2010.
* The revised Pension Fund Regulatory and Development Authority Bill: It was first introduced in 2005. The authority was established in 2003 through an executive order but the bill makes it a statutory body.
It establishes an authority to develop and regulate the new pension system (NPS), which provides old age income security for all individuals, including those in the unorganised sector and has been operationalised for new central government employees through a notification.
It lapsed with the dissolution of the 14th Lok Sabha. The original bill had been examined by the Committee on Finance, which had submitted its report in July 2005.
* Banking Laws Amendment Bill, 2011: This bill seeks to address the capital raising capacity of banks and strengthen the regulatory powers of the Reserve Bank of India. It has been listed for introduction in the budget Session 2011.
* Bill on Factoring and Assignment of Receivables: The bill will create a separate legal framework for provisions of factoring services in the country in order to facilitate increased credit access to the industry. It will also provide for receivable management. This bill has been listed for introduction in the budget session.
* The State Bank of India (Subsidiary Banks Laws) Amendment Bill, 2009: It seeks to amend the State Bank of Hyderabad Act, 1956 and the State Bank of India (Subsidiary Banks) Act, 1959. It seeks to amend the acts to reflect the transfer of ownership of the State Bank from the Reserve Bank to the central government. The bill lapsed with the dissolution of the 14th Lok Sabha.
* Bills to amend RDBFI Act 1993 and SARFAESI Act 2002: These two bills seek to strengthen recovery mechanisms available to secured creditors. An additional objective would be to strengthen the securitisation and asset reconstruction market in the country. They are listed for introduction in the budget session.
Other legislation that also found mention in Finance Minister Pranab Mukherjee’s budget speech include the Companies Bill, 2009, Direct Taxes Code, 2010 and GST.
* The Companies Bill, 2009 seeks to replace the Companies Act 1956 to change the regulations governing corporate structures and redefine corporate relationships.
The Companies Bill, 2008 was drafted along the same lines but lapsed with the dissolution of the 14th Lok Sabha.
It provides for a single legal framework to comprehensively integrate principles of corporate governance and harmonise the company law framework.
It was introduced in August 2009 and referred to the Standing Committee on Finance, which submitted its report in August 2010. The finance minister indicated that the proposed bill will be introduced in the Lok Sabha in the budget session.
* Direct Taxes Code, 2010: This bill replaces the Income Tax Act, 1961, and seeks to create a new direct taxes framework. The code changes the current income tax slabs for individuals and corporate entities.
The bill was introduced in the Lok Sabha in August 2009. The Standing Committee on Finance examined the bill and is likely to table its report in the budget session.
* GST: The bill will introduce a goods and services tax to be applicable in all states across the country. This will be done through an amendment to the constitution.
(Source: PRS Legislative Research, Centre for Policy Research)
