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Ordinance on SLR by month-end

Special Correspondent

NEW DELHI: An Ordinance to arm the Reserve Bank of India (RBI) with powers to cut the statutory liquidity ratio (SLR) below the current floor of 25 per cent is likely to be promulgated by the month-end or early February, according to a top Finance Ministry official.

Even as the Government has to await the President's assent for issuing the Ordinance, the Minister of State for Finance, P. K. Bansal, told newspersons here on Wednesday that a Bill to amend the Banking Regulation Act was likely to be tabled in the budget session of Parliament.

Interacting with the media on the sidelines of seminar on microfinance here, Mr. Bansal said that apart from lifting the 10 per cent cap on voting rights by foreign investors in private sector banks, the Bill would have a provision for removing the SLR floor. "We are negotiating with our allies... Discussions on the issue [amendment of the Banking Regulation Act] will be carried out during the budget session. We will be trying again and we are confident that during the budget session, this Bill will be tabled,'' he said.

The UPA Government failed to table the Bill in the last session as its Left allies were in stiff opposition to the removal of the ceiling on voting rights of foreign entities. As for lowering of the SLR floor, he said it was a separate issue altogether and the Government had started the process of promulgating the Ordinance.

According to the Ministry official, the Ordinance is to be sent to President A. P. J. Abdul Kalam within the next two days following which his assent should be expected by the end of the month or the first week of February. However, as the RBI is scheduled to release its quarterly monetary and credit policy review on January 31, the general expectation is that the Ordinance would be in place before that date.

Under the current SLR norms, it is mandatory for banks to keep 25 per cent of their total deposits.

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