AIBOC CIRCULAR NO. 33 DATED 28.03.2011

AIBOC issued its circular No. 33 dated 28.03.2011 on the Banking Laws (Amendment) Bill 2011. We are reproducing the same here for our readers.

CIRCULAR NO.33                                       DATE: 28.03.2011

TO ALL AFFILIATES /MEMBERS:

THE BANKING LAWS (AMENDMENT) BILL 2011 - UNRESTRICTED VOTING RIGHTS FOR SHARE HOLDERS

We have addressed a communication to the Finance Ministry with regard to the captioned subject.  A copy of our communication is annexed.

With greetings,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

No.1410/176/11                                                              28.03.2011

To,

Sri. Pranab Kumar Mukherjee

Hon’ble Finance Minister,

Government of India,

South Block, Parliament House,

New Delhi.

Respected Sir,

THE BANKING LAWS (AMENDMENT) BILL 2011

UNRESTRICTED VOTING RIGHTS FOR SHARE HOLDERS

s per the news paper reports, the Government has tabled a bill in the Lok Sabha to raise the ceilings on voting rights of share holders of nationalised Banks from the existing 1% to 10% and to remove the cap of 10% in respect of Private Sector Banks. The argument in favour of this is that, the move will make investment in Government owned Banks more attractive. The proposed amendments to the Banking law would increase the access of the nationalised Banks to the capital market to raise funds required for expansion of the Banking business. It is also argued that, it would enable the Public Sector Banks to increase or decrease their authorized capital with approval from the Central Govt. and RBI without the present ceiling of Rs.3000 crores.

The amendment will empower the Public Sector Banks to issue bonus shares and rights issues for accessing the capital market to raise capital required for expansion of business.

We have been reiterating time and again that, the above moves are the covert attempts of the Government to privatize the well run Public Sector Banks and open their doors to the Private investors and Industrial Houses to take control over these goose laying golden eggs.  Hence, we oppose the move of the Government to offer more voting rights for Bank share holders by removing the present ceiling of 1% and raising it to 10%.

We wish to reiterate that the move is fraught with potential danger to the existence of the Public Sector Banks in the country. Therefore, we request you to shelve the move in the interest of the Public Sector Banks, which have played a very important role in the economic development of the country, including implementation of the ambitious programmes of the Govt. such as poverty eradication, employment generation and financial inclusion etc.

We, once again, request to withdraw the proposed Banking Laws (Amendment Bill) 2011, tabled in the Lok Sabha. We have the confidence that our request will be considered positively, keeping the national interest uppermost.

Thanking you,

Yours faithfully,

(G.D. NDAF)

GENERAL SECRETARY