Tribune News Service
New Delhi, February 1
The Budget’s major headline grabbing news in the financial sector was about privatising two public sector banks, one general insurance firm and increasing the FDI limit in insurance from 49% to 74% with a few built-in safeguards.
At the same time, the Budget also proposed to set the stage for the eventual sale of nationalised banks, a charter for investors, regulated gold exchanges, complete decriminalisation of Company Act offences and relaxed norms for NRIs to set up one person companies.
Sitharaman said the long-awaited resolution of bad loans with banks will be made by transferring them to an asset reconstruction company (ARC). The name of the banks are under wraps but the setting up of ARC means more could be added to the list being put up for sale.
The Budget also proposed hiking FDI in insurance sector to 74% but majority of board directors and key management personal must be Indians, with at least 50% of directors being independent directors, and specified percentage of profits to be retained as general reserve.
For ordinary depositors, the Deposit Insurance and Credit Guarantee Corporation has finally been permitted to increase deposit insurance coverage to Rs 5 lakh per depositor from Rs 1 lakh.
The Budget also proposes to increase foreign portfolio investments in corporate bonds to 15% from 9%, open up certain government securities for NRIs and domestic investors.