India's federal government Tuesday introduced a draft bill in the lower house of parliament that seeks to amend the constitution to enable the introduction of the proposed Goods and Services Tax. The government also introduced a bill seeking to amend three banking laws, including the removal of restrictions on the voting rights of a bank's shareholders.
India plans to introduce a uniform Goods and Services Tax across the country from April 1, 2012, replacing multiple taxes presently levied by the federal and provincial governments on goods and services.
The proposed Banking Laws (Amendment) Bill 2011, meanwhile, aims to arm the country's central bank with powers to seek and inspect information and data from associate enterprises of banks such as insurance or mutual fund subsidiaries.
Under existing rules, the voting rights of a shareholder are capped at 1% in state-run banks and 10% in private banks, irrespective of the equity holding. The bill proposes aligning the voting rights in private banks in proportion to the equity holding and raise the ceiling in state-run banks from 1% to 10%.
The proposed changes will also let state-run banks issue bonus shares and rights issues. The amendments also propose letting state-run banks raise their authorized capital beyond the current 30 billion rupees ($668 million). The bill, if cleared by Parliament, will let the Reserve Bank of India inspect banks' merger proposals, exempting them from the provisions of the Competition Act.
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