Yashwant Sinha, Chairman of the Parliamentary Standing Committee on Finance and senior Bharatiya Janata Party (BJP) leader on Thursday said giving new banking licences to corporate houses was a very bad idea.
“This was something where a clear separation took place decades ago for a very good reason. Any relaxation in these norms is going to lead to an unnecessary conflict of interest and an unnecessary risk to the financial sector,” Sinha said while speaking to reporters on the sidelines of an Indian Merchants Chamber conference on reinsurance.
He was reacting to a recent report by the International Monetary Fund (IMF) that said India should not be hasty in giving banking licences to companies.
Recently, in the performance audit of agricultural debt waiver and debt relief scheme, the office of the Comptroller and Auditor General (CAG) had observed that ineligible accounts of farmers were extended benefits under the scheme. Explaining his stand, Sinha said this is a serious matter. He added this scheme was made a part of the Budget in 2008 as a last minute proposal. “Then, it has been shabbily implemented in the absence of strict guidelines by the government,” he said further.
The CAG, according to Sinha, had pointed that 50 per cent of loan remissions under the scheme was to wrong people. He said the fault was not just with the bank employees, but with the government, finance ministry and finance minister as well. On the issue of General Anti-Avoidance Rules (GAAR), he said the committee had given its recommendations to the government through Parliament on the Direct Taxes Code (DTC) Bill, which contained a chapter on GAAR, on March 9 last year. He added government did not consider their proposals and was instead postponing its implementation by two years.
“GAAR should be included in the DTC Bill, but with the amendments which the Standing Committee on Finance has suggested. Other nations have similar provisions and there is no reason to shy away from it,” he said.
About the rise in cap on LPG cylinders, Sinha said the government was in the habit of taking credit in whatever it did. “They took credit for reducing it to six and are now taking credit for increasing it to nine,” he said.
On fuel price increase, Sinha said the oil marketing companies should be given the freedom to revise prices every fortnight, like they were allowed to do earlier. He further added in principle, they were in favour of direct cash transfer scheme, but said it had been politicised.
He said if government discussed the increase of foreign direct investment (FDI) in insurance from 26 per cent to 49 per cent, a solution could be worked out with the Opposition.