Social Control Over Banks: Bill Introduced

NEW DELHI, DEC.

23. The long-awaited legislation to bring banking institutions in the country under effective social control was introduced in Parliament today.

The legislation, entitled the Banking Laws (Amendment) Bill, 1967 proposed a number of steps to achieve this objective, including reconstitution of Boards of Directors of banks and the appointment of fulltime Chairmen, who will be a professional bankers and the Chief Executive Officer.

The Bill not only provides that a majority in the Board of Directors should not consist of persons having substantial interest in large and medium industries but that “no loans or advances should be given to directors or concerns in which they are interested.”

It is further stipulated that the Chairman of each bank will be a professional banker and a full-time Chief Executive Officer. The Reserve Bank may reconstitute the Board or appoint a new Chairman, if necessary.

The Reserve Bank’s powers are also being enlarged to cover matters having a bearing on monetary liability and the equitable allocation and efficient use of its resources. The Centre is also taking the power to acquire the business of a banking company if it becomes a persistent defaulter in complying with the requirements.