Is FDI solution of everything???
By Excalibur Stevens Biswas
The growth story is now linked to FDI and Disinvestment and it is the theme of the governance by the RSS ruled BJP Government of India,remote controlled by US economic interest.
FDI in Defence, railways has been the assnce of Union budget.
The Union Cabinet allowed foreign investment in the Railways for the first time and raised limit for such investment in the defence sector, steps intended to raise funds for expansion of the Railways and encourage domestic manufacture of arms.
100 per cent foreign investment in railway infrastructure projects will be allowed while in the case of defence the limit has been raised to 49 per cent from the current 26 per cent, subject to the Indian owners exercising management control.
India has opened up defence sector for FDI.
Insurance is also subjected to FDI.
More over,the government is proposing a major overhaul of its foreign direct investment (FDI) policy as part of the Narendra Modi-led administration's plan to woo overseas investors and improve ease of doing business in India, which ranks at a lowly 134 out of 189 global economies in this respect, according to the World Bank.
The government is looking to adopt the international practice of linking policy with industrial codes to ensure foreign investors won't have to wade through complicated press notes or circulars to decipher the policy for a sector.
"Discussions are on. There is merit in seeding the industrial codes with the FDI policy," said a government official aware of the deliberations. The move is in line with the BJP's election manifesto pledge to ensure "that a conducive, enabling environment is created making 'doing business' in India easy. We will focus on cutting the red tape, simplifying the procedures and removing the bottlenecks."
Multi brand is the greatest stake for US economy in India.Political compulsion postponed this despite a declaration made by earlier UPA second government just because lacking the mandate as TMC led by Mamata Banerjee withdrew support.Ironically it united all forces of open market economy to create a Namo tsunami for the missing mandate.
The mandate achieved. Second generation of reforms happens to be topmost priority.This government is simply by passing the parliament and policies as well as legislation are made directly by the cabinet on the recommendations made by Private parties,extra constitutional elements.
Expressing its strong opposition to government's move to increase FDI cap in insurance sector, the CPI(M) today asked all Opposition parties to join hands in opposing the FDI policy.
"The two-and-a-half months period of the Narendra Modi government has confirmed that it will not only pursue the same neo-liberal policies as the previous UPA government but it will do so more vigorously," the Central Committee of the CPI(M) said in a statement after its three-day meeting in New Delhi.
It is not going to happen.
FDI in multi brand is imminent and single brand retail FDI combined with etailing has already ensured monopolistic control of foreign money on the retail market countrywide.
The left has lost its ground despite monopolistic control on trade unions.In parliamentary politics is has lost its relevance.
India Incs and foreign capital ensured a solid mandate for FDI Disinvestment raj and Congress only failed to achieve second generation reform agenda for which it is kicked out.
There is no basic difference the two main rivals of Indian polity ie Congress and Bjp.They are aligned to destroy the working as well as agrarian classes to open up the free market economy.
It has been always the trend.Minority governments did all the damage just because of this two party combination.
Banking Regulation act simply omitted the provision of ceiling of voting right of the private stakeholders.It was limited to ten percent only.
Indian PSU banks hold the key of the inclusive economy since nationalisation.
The Nayak Committee has recommended repeal of the Bank Nationalisation Act and SBI Act, which is preposterous given the unparalleled contribution of PSBs to the economic development of the country.
NDA government has singlehandedly targeted PSBs to generate FDI with its disinvestment plan.FOS would cut down government shares to twenty nine percent and thanks to new banking regulation act,unlimited voting right of the private and foreign investors would make it private.
The government has not to repeal nationalisation and rather it would simply gift the PSBs to private and foreign parties.
For free flow of foreign capital in the dollar linked economy ,disinvestment is the prime methodology which would attract foreign investors as it is projected by the SENSEX and NIFTY bull run continued.
It is the ultimate solution for the basic problems like growth rate,industrial and agri production,fiscal deficit,inflation and price rise.This is it.It is the ultimate balance of payment.
Trade unions oppose FDI and disinvestment.Thus,labour reforms have to be passed sooner or later to kill factory act,trade unions and labour commission with a single stroke.
ALL PSBs have to be sold off within three years to achieve th ultimate FDI Realty Raj of complete ethnic cleansing.
State Bank of India happens to be lifeline network of Indian financial system.It happens to be the supreme target for the FDI Dinsinvestment regime.
Eyeing Rs 58,425 crore this year by selling government stake in PSUs, Finance Minister Arun Jaitley on Sunday said that disinvestment process is on schedule.
"The Department of Disinvestment (DoD) has already appointed advisors in some cases and the follow-up actions on those PSUs on some part of equity is to be divested is already progressing as scheduled," he said after addressing the Central Board of the Reserve Bank here.
The process for disinvestment in ONGC and NHPC, among others, has already been started.
Also, the government is looking to sell 5 percent stake in SAIL and 10 percent each in RINL and HAL in the current fiscal besides an outright sale of Tyre Corporation of India.
The disinvestment of 10 percent through an initial public offer (IPO) in Rashtriya Ispat Nigam Ltd (RINL) is tentatively scheduled for completion in the current financial year.
The DoD is at present engaged in outright sale of only one CPSE, Tyre Corporation of India (TCIL).
The Cabinet has also approved sale of residual government equity in Hindustan Zinc and Balco.
Jaitley further said: "We have certainly given the figure involved in that and the DoD is working on it."
In the Budget, the government has estimated to collect Rs 43,425 crore from selling stake in PSUs and another Rs 15,000 crore from sale of residual stake in the erstwhile government companies.
Of the disinvestment target of Rs 40,000 crore in 2013-14, the government had mobilised Rs 15,820 crore. In 2012-13, of the Rs 30,000 crore target, Rs 23,957 crore was raised.
In 2011-12, only Rs 13,894 crore was raised of the Rs 40,000 crore target.
Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.
Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans". In a narrow sense, foreign direct investment refers just to building new facilities. The numerical FDI figures based on varied definitions are not easily comparable.
The foreign direct investor may acquire voting power of an enterprise in an economy through any of the following methods:
by incorporating a wholly owned subsidiary or company anywhere
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by acquiring shares in an associated enterprise
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through a merger or an acquisition of an unrelated enterprise
participating in an equity joint venture with another investor or enterprise
The comments in the editorial "One bad apple?" (August 8) are prejudiced against public sector banks and biased in favour of privatisation. The manner in which you have argued for the implementation of the PJ Nayak Committee's recommendations makes this clear.
The Nayak Committee has recommended repeal of the Bank Nationalisation Act and SBI Act, which is preposterous given the unparalleled contribution of PSBs to the economic development of the country.
The banking system was insulated from the recent global financial tsunami only because our banks were predominantly under the public sector. Further, given the present economic scenario of stagflation, PSBs have a great role to play in not only achieving total financial inclusion but catering to the needs of all segments of the economy. You have linked the SK Jain bribery episode to the inadequate pay packets of CMDs. While this needs to be substantially increased, emoluments alone do not guarantee integrity.
What PSBs need is better regulation and monitoring by the Government and the RBI and not de-regulation and private control. The Syndicate Bank-SK Jain bribery episode is another reminder of the need to plug the loopholes in the banking system to weed out corruption. In this context, t the Nayak Committee recommendations of distancing the Government from PSBs must not be given importance.
CH Venkatachalam, Gen Sec
All-India Bank Employees' Association
Banking Regulation Act, 1949
[Act no. 10 of Year 1949, dated 10th. March, 1949]
An Act to consolidate and amend the law relating to banking 1[***]
BANKING REGULATIONS ACT 1949
The Banking Regulation Act was passed as the Banking Companies Act 1949 and came into force wef 16.3.49. Subsequently it was changed to Banking Regulations Act 1949 wef 01.03.66. Summary of some important sections is provided hereunder. The section no. is given at the end of each item. For details, kindly refer the bare Act.
Banking means accepting for the purpose of lending or investment of deposits of money from public repayable on demand or otherwise and withdrawable by cheque, drafts order or otherwise (5 (i) (b)).
Banking company means any company which transacts the business of banking (5(i)(c)
Transact banking business in India (5 (i) (e).
Demand liabilities are the liabilities which must be met on demand and time liabilities means liabilities which are not demand liabilities (5(i)(f)
Secured loan or advances means a loan or advance made on the security of asset the market value of which is not at any time less than the amount of such loan or advances and unsecured loan or advances means a loan or advance not secured (5(i)(h).
Defines business a banking company may be engaged in like borrowing, lockers, letter of credit, traveller cheques, mortgages etc (6(1).
States that no company shall engage in any form of business other than those referred in Section 6(1) (6(2).
For banking companies carrying on banking business in India to use at least one word bank, banking, banking company in its name (7).
Restrictions on business of certain kinds such as trading of goods etc. (8)
Prohibits banks from holding any immovable property howsoever acquired except as acquired for its own use for a period exceeding 7 years from acquisition of the property. RBI may extend this period by five years (9)
Prohibitions on employments like Chairman, Directors etc (10)
Paid up capital, reserves and rules relating to these (11 & 12)
Banks not to pay any commission, brokerage, discount etc. more than 2.5% of paid up value of one share (13)
Prohibits a banking company from creating a charge upon any unpaid capital of the company. (14) Section 14(A) prohibits a banking company from creating a floating charge on the undertaking or any property of the company without the RBI permission.
Prohibits payment of dividend by any bank until all of its capitalised expenses have been completely written off (15)
To create reserve fund and 20% of the profits should be transferred to this fund before any dividend is declared (17 (1))
Cash reserve - Non-scheduled banks to maintain 3% of the demand and time liabilities by way of cash reserves with itself or by way of balance in a current account with RBI (18)
Permits banks to form subsidiary company for certain purposes (19)
No banking company shall hold shares in any company, whether as pledgee, mortgagee or absolute owners of any amount exceeding 30% of its own paid up share capital + reserves or 30% of the paid up share capital of that company whichever is less. (19(2).
Restrictions on banks to grant loan to person interested in management of the bank (20)
Power to Reserve Bank to issue directive to banks to determine policy for advances (21)
Every bank to maintain a percentage of its demand and time liabilities by way of cash, gold, unencumbered securities 25%-40% as on last Friday of 2nd preceding fortnight (24).
Return of unclaimed deposits (10 years and above) (26)
Every bank has to publish its balance sheet as on March 31st (29).
Balance sheet is to be got audited from qualified auditors (30 (i))
Publish balance sheet and auditors report within 3 months from the end of period to which they refer. RBI may extend the period by further three month (31)
Prevents banks from producing any confidential information to any authority under Indl Disputes Act. (34A)
RBI authorised to undertake inspection of banks (35).
Amendment carried in the Act during 1983 empowers Central Govt to frame rules specifying the period for which a bank shall preserve its books (45-y), nomination facilities (45ZA to ZF) and return a paid instrument to a customer by keeping a true copy (45Z).
Certain returns are also required to be sent to RBI by banks such as monthly return of liquid assets and liabilities (24-3), quarterly return of assets and liabilities in India (25), return of unclaimed deposits i.e. 10 years and above (26) and monthly return of assets and liabilities (27-1).
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