The government has listed the Banking Laws (Amendment) Bill 2021, which will be taken up during the Winter Session of Parliament to privatise two public sector banks as part of the Rs 1.75 lakh crore disinvestment target in the current fiscal year.

The legislation is one of the 26 bills that are scheduled to be introduced during the session.

The bill intends “to effect amendments in Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidental amendments to Banking Regulation Act, 1949 in the context of the Union Budget announcement 2021 regarding privatisation of two Public Sector Banks.”

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Finance Minister Nirmala Sitharaman in the Union Budget 2021-22 announced that two public sector banks would be privatised as part of the government’s disinvestment target.

Sources say that the bill is not likely to mention the names of the two banks that are going to be privatised. Instead, the government would create enabling legislation for privatisation of public sector banks.

LOGIC FOR AMENDMENT TO BANKING LAW

There is a compelling logic for creating an enabling legislation instead of a specific target law. In India, there have been two strong moves to nationalise banks. The first was in 1969 and the second in 1980. In total, 34 banks were nationalised.

For the bank nationalisation process, an act of Parliament was created. This was apart from the specific law that created the State Bank of India (SBI), which is the country’s largest public sector bank.

Over the years, the shape and contours of public sector banks changed via amalgamations which did not require changes to the existing banking laws. However, the government has to introduce laws in Parliament to ‘denationalise’ or privatise banks.

PENSION BILL LIKELY IN WINTER SESSION

Another significant bill likely to be introduced in the upcoming Parliament session is the Pension Fund Regulatory and Development Authority (Amendment) Bill, 2021. Its purpose is to amend the Pension Fund Regulatory and Development Authority (PFRDA) Act.

The amendment will facilitate the separation of the National Pension System Trust from PFRDA as announced by the finance minister in the last budget to promote wider pension coverage.

The amendment is likely to be expected to define the powers, functions and duties of the National Pension Scheme Trust, defined in the PFRDA (National Pension System Trust) Regulations 2015, and the trust may get shifted under the companies act as a charitable trust.