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CII in favour of ordinances for reforms bills and overhaul of banking sector

Confederation of Indian Industry has decided to seek opinion of constitutional experts and lawyers as to whether the Vajpayee government at the Centre can promulgate ordinances to implement key pending financial bills such as the Insurance Regulatory Authority Bill and Companies Bill.

Reacting to the limitation of the caretaker government in Delhi, CII's new president Rahul Bajaj said in Bombay today that the government must function effectively. "We have six- month-long period to go to the poll. While the government may not take any new policy initiatives or popular measures ahead of the election, it must go ahead with the ordinances for implementing the pending reform bills without any delay," he observed.

"We must try to create an environment in the country that would be responsive for growth and changes," he said.

On the financial sector reforms in India, Bajaj insisted on gradual privatisation of the profitable public sector banks, starting with five leading banks, with greater autonomy and power.

Suggesting the possibility of empowering banks and financial institutions under Section 29 of the State Finance Corporations Act, he said that the government should allow the unviable weak banks to close down.

The government should not go for funding tax-payer money to raise capital adequacy ratio in these banks. Such financing would act as incentives to the management of loss-making banks, he said.

Expressing concern over growing fiscal deficit, high rate of government borrowings and interest rate, Bajaj said that the high-powered CII committee headed by the ICICI CEO K V Kamath on non-performing assets of banks would submit its report to the Union finance ministry by October.

Bajaj also argued in favour of reducing priority sector lending at subsidised rates and proposed to increase the capital adequacy norms of banks to 12 per cent of loan assets by the year 2002.

He said that debt has become debased in India because not repaying in time or wilfully defaulting carries no real risk of bankruptcy. Poor foreclosure procedures and long-drawn out bankruptcy processes encourage debt default which in the long run creates sickness in the banking sector and chokes off funds for industry.

Bajaj outlined a much faster and a more transparent bankruptcy procedure and suggested that the new Sick Industrial Companies Bill which is pending in the Rajya Sabha be introduced as an ordinance.

Emphasising on corporate governance through internal reforms, he said, no company could expect to attract capital be it debt or equity without corporate governance and disclosures.

In this context, he said that the CII's code of corporate governance published in April last year, is gaining attention of the corporate members and already received enquiries from a dozen of leading Group A companies listed on the Bombay Stock Exchange.

UNI

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