Govt to push banking, insurance reforms after vote

Fresh from winning a vote of confidence, the government is likely to seek parliament's approval for reforms to boost foreign investment in private banks and insurance firms, senior officials said.

It may raise the foreign investment limit for the insurance sector to 49 percent from the present 26 percent, open up the pension sector further, and increase the voting rights of investors in private banks proportional to their shareholding.

Junior Finance Minister Pawan Kumar Bansal said the government would "move forward in all areas" of financial sector reforms.
"The insurance legislation is with a group of ministers and now we have to see what they say," he said after emerging from parliament.

At present foreign investors can buy up to 74 percent of a private Indian bank but their voting rights on how the bank is run are capped at 10 percent, a major deterrent for investors trying to gain management control.
The government could also move a bill to improve the working of the country's largest lender, State Bank of India, in the next session of parliament scheduled to begin in August, a finance ministry official, who did not wish to be identified, told Reuters.

The government introduced bills to enact these reforms in 2005 but met stiff opposition from communist parties, who provided the coalition government with a majority until withdrawing support last month and triggering the vote.
Finance Minister Palaniappan Chidambaram said the confidence vote win showed the Congress party-led coalition had majority support for reforms and it would work with other parties to carry them forward.

Source: Thomson Reuters