RBI to be allowed to fix SLR in SEZs: Bill

New Delhi, Mar 9 (UNI) Finance Minister P Chidambaram today introduced in the Lok Sabha the Banking Regulation (Amendment) Bill, 2007, aimed at allowing the Reserve Bank of India to specify the Statutory Liquidity Ratio without any floor, particularly in Special Economic Zones (SEZs).

According to the statement of objects and reasons of the Bill, it is necessary that RBI, as the regulator and the authority vested with the powers to conduct monetary policy, has the necessary flexibility regarding stipulation of holding of liquid instruments by banks.

As such, the existing floor of 25 per cent has to be removed keeping intact the ceiling of 40 per cent as the guidance for RBI.

It will give more operational flexibility to RBI in the conduct of monetary policy, Mr Chidambaram said.

The Bill also seeks to amend section 53 of the Banking Regulation Act, 1949 to provide that requirement of laying the draft notification before both Houses of Parliament shall apply in cases of exemptions being granted to institutions/banks/branches located in SEZs.

UNI