׾ֵ֕ ָ (ָ֟) : ֮֮ߵ ֳ֬ , ײֻ ָ ָ ָֻ  ֮ ֵ , -߮ ֟ ָ ֟ օ ״ ׸ִ ײֻ ָ֬ ״ ׸ִ ֵ֟ ֵ פ ֜ Ù׸ ֈӛ ֮

ֳ֬ , 1969 ֻ֮և ֵ օ ֲ әֻ ־ָ Ùֻ , ָ֬ ָ Ù ֮, 1969 ָ և և ָ ׾֢ ӡ 16 և ָ և և ״׮Ù ֵ ֵօ 19 և ײ֮֙ ֵ ֵ , ә ֳ , 14 ֻ֮և ָָ ֻ ׻ֵ ֌ ، ו̛, 00 ָ , ׸ פ ֲ և , ֻ֮և פ ֵօ ָ ֻ ֌ ״ֻ֟ , ״ֻ֮ , - ִ ׻֋ ֻ֮և ָ פ ָ֬ ָ ָ߲ ֆ ֟ ֙ ߅ ֮֮ߵ ֳ֬ , ׾ֵ֟ ׌ ־ ֟ ֜ ߅ 000 ׸ ֵָ ׻ ֵ ֌ כߕ̮ ׻ֵ ֵ ׻֕ ֟ ֮ ִ֕־֤ ֮ , ֮֜ , ֟ և ߅ , 1990 ױ և ևԅ ָ 0 ִ֮ , ֮֮ߵ Ϭ֮ ӡ ״ ׸ִ ױ ևև֮ ֟ և  ֮֜ ׻֋ ָ և ן ֻ߅ ָ NDA ָָ 33 ָә ײ  , 51 ָ ֵ , , ָ ׸ִ , 51 ָә ֙ ֲ 33 ָ , ֳ ָ ״ ׸ִ ׸ִ օ ׸̾ ֮֮ߵ ָ , ־ ֣ 50 әֻ֮ , ִ ָ ֮ ָ ָ ִ GDP ֵ֟ ֵ Banking credit of Private Sector as a ratio of GDP. 2001 2003 00 190 ָә GDP rate , 00 143 ָә , և 136 ָә , ִԮ 118 כ ֱ 35 ָә ָ ֜ ֮֮ߵ ׾֢ ӡ ֮ 2005-06 ֕֙ ïߓ ֵ֟ , ֌ 꿵 פ ׿ֵֻ ָ ֈ ָ֬ ָ ֮ ӕ ֜֋, ֕ ײֻ ָ ֵ

('4b/sch' ָ ָ)


׾ֵ֕ ָ (ָ֟) : ָ ӕ ֜֋ - ֟ , ֲ ꅠ 33% ֟ ׻֋ ָ , ֵ֟ ֵָ ו֮ ׌֙ ָ ػ , ִ : ߮ և  ֮ ׻֋ ֵ  ׻֋ ֮֯ ߮ ׬ ׬ : ־֮֬ ֮֯ ֵ֟ ָ ׌ ֵָ , ָ ׌ ֵָ ֮֋, , և ״׮Ù ָ״ֿ֮ ײ֮ ӳ־ և ״׮Ù ә ֮ ׬ , ו ָ , ֟ כߕ̮ ׻ֵ ֟ , ָ ״ִ֮ , ֯ ֟ ֮֟ , ״ և ֵ ֲ , ִֵ 5 ß ״ և ֵ֟ ֵ "These days the proposal on interest rate revision is not even placed before the Board of Directors."

ֵָ ֟ և , ֻ , ׻֋ 51% 33% ֟ ָ ֯ ָ ָ ֲ , ׯ׾ֵ Ù ֲ Ԥ , ִֵ ֮ ך , ֻ פ ֵָ֮ פ , ֮ ֱ , ֮ ׬ և ֵ ָ ֕ ָ ֮ ֛ ֻ ֵօ

25 ߓ ו֮֟ և , ֯ ֯ߋ ו֋ 25 ֤ և , ֯ ֯ߋ ו֋ ֮ ֯ ֻ ׯ֔ ָ ֯ߋ 75,000 ֜ ֵ ֛-֛ , ԟ և  ֛-֛ ׮ֵ , ו֮֟ և ׻ֵ , ֯ ֵ , ָ և ִ֮ ֤ ״֛ , ֯ ״ֻ ֟ , ׻֋ ֯ߋ , ֻ ܵ ֤ և ׻֋ ָ ־ã ׻֋ ָ ֕ ֲ ִ

׻֋ ײֻ ֛ߋ ָָ 33% ֟ , ָ ױ ו ״ ׸ ׸ ֟ , ӳ־ օ ֲֻ֟ ָ ָ ׾֤ ֋, ָ ָ և , և߆և߆և , ֛ߋ , ָ ִ ֕ և߆և߆և ִָ ֮ ֮֮ ָ ָ ֮ և ֜ ״ ׸ ֜ , ִ ָ 51% 33% ֣ ׸̾ ә ָ ֋, ָ ׾֛֮ ֕ ֯ ׸ ִ ָ Ù֮ ֮ ә , ֲֻ֟ Ù֮ ָ ׸̾ ָ֕ ֺ ֵָ ֮ ֯ ֮ ױ ֟֟ ֕ ָ כ׾֛ כ׾֛ ߕ ִ ֵָ , ֛օ ָ ֮֯ ד֕ ֮֜ , ִ ֵָ , ׻֋ ֛օ ֲ ׾֛֮ֆ ׮ֻ֮ ׻֋ ֯ ָ ֮֮ ֲ ֯ 33% , ֳ ֲ , ֣ ײֻ ִ֣Ԯ

(ִ֯)MCM/4C ָ


THE MINISTER OF FINANCE (SHRI P. CHIDAMBARAM): Mr. Vice-Chairman, Sir, I am grateful to all the sections of the House, especially the hon. Members who participated in this discussion and, without exception, broadly extended their support to this Bill. I can do no better than 'a core deal', an expression used by Dr. Jalan. Among the developing countries, and even taking into account some developed countries, India's banking system is the best and one of the best regulated systems in the world. The reasons are not far to seek. The first major step taken, which has paid the best dividend, was the nationalisation in 1979-80. Through that step, the character of Indian banking has changed; the goals and purposes of Indian banking have changed. The banks became a powerful instrument to reach financial services to the masses of this country. Of course, a number of reforms have been undertaken by the successive Governments. And, it is to the credit of the successive Governments that the role of the Government and the role of the Reserve Bank have been complementary to each other and, together, both have worked to make the Indian banking system strong and better-equipped to serve the goals under which banks should function. I think, experience has taught us that we have to move to the next stage, that is, better corporate governance.

This Bill, as I said in the opening remarks, is aimed at improving corporate governance. We have changed the composition of the Board of Directors. And, each change has a purpose. Of course, Members have correctly pointed out that it is no longer possible to manage such large businesses with one full-time Chairman and one Executive Director. After the State Bank of India, which has a Chairman and up to three Managing Directors, there are a couple of banks which are already touching a business of Rs. 2,00,000 crore. Rupees two lakh crore is a lot of money. It is a lot of responsibility. There are a lot of functions to be performed. So, I think, we are taking a right decision and enabling us to appoint four full-time Directors -- one of them will be the Chairman, the other three will be Executive Directors. Executive Directors, as everyone knows, are selected through a very transparent process by an Appointments Committee, headed by the Governor, Reserve Bank, in which the Deputy Governor of the Reserve Bank has an important role to play. Therefore, except in a case where they will make a gross mistake, my experience is that most of their choices have turned out to be correct choices. Naturally, we need to have Directors, who reflect the shareholding capability. Since private shareholding will not exceed 49 per cent and the number of Directors, to be appointed under clause 8 and clause (i), cannot exceed six. The number of Private-shareholder Directors cannot exceed three, which is why the main Ministry may be providing for one or two or three Private Directors of non-Government shareholders, and the Government will have a right to appoint the remaining Directors. As far as Private Directors are concerned, a new clause is being introduced to say that they have to always satisfy the 'fit and proper' condition. Mr. Bagrodia asked me, "What is 'fit and proper'?" Of course, 'fit and proper' is not defined. But many words of art, law and business are not defined. 'Good faith' is not defined, but 'good faith' has a meaning. Every lawyer, every Judge knows what 'good faith' is.

(Contd. by 4d -- VP)


SHRI P. CHIDAMBARAM (CONTD.): Similarly, while 'fit and proper' is not defined in the Act, there are well-established criteria in the banking industry for who is 'fit and proper'. Every Director has not only to satisfy the fit and proper condition, throughout his tenure he shall continue to satisfy the fit and proper condition. If he is not satisfying the fit and proper condition, then, there is a power to ask him to resign or he will be removed from office. And, the power is being given to the Reserve Bank of India. The Reserve Bank should find him to be a fit and proper person based upon his track record, integrity, and such other criteria as the Reserve Bank may notify from time to time. As far as Government Directors are concerned, since Government is the majority shareholder, and I reiterate, the policy of the UPA Government is that in public sector banks we shall always have a shareholding of 51 per cent only. It is not our intention to dilute below 51 per cent. I know, Mr. Ramdas Agarwal pointed out that the previous Government had intended to bring it down to 33 per cent. Now, at that time, I commented, "How can you bring down the shareholding of Government to 33 per cent and, yet, retain the public sector character of a bank." We retain control of a bank, but, we cannot retain the public sector character of a bank. If you wish to retain the public sector character of a bank, which is the policy of the UPA, -- and I have no apologies for that policy, I support that policy fully, -- then, I think, the Government shareholding cannot go below 51 per cent. As long as Government shareholding is 51 per cent or more, then, Government would have the right to appoint Directors. And this is not an unguided power because the section says who these Directors shall be and what interest they should represent. After this Government took office, we have framed guidelines. There is a rather complex process of identifying people who fit those guidelines, and the ultimate decision is taken by the Appointments Committee of the Cabinet, which is the highest Cabinet body. I think, most Directors that we have appointed have turned out to be diligent Directors who attend Board meetings. An, then, I travel around and I meet some of them. They come and tell me what they have learnt and what they have contributed. It is possible that one or two Directors are not so diligent, but I shall, certainly, try to address these Directors and tell them they should be more diligent; they should attend all the meetings; they should learn and they should contribute to the functioning of the bank.

Sir, a question was raised about banks which are close to 51 per cent, what will they do? But there are only three ways of raising capital. One is to add to the reserves by transferring your profits to reserves or to infuse fresh capital. Now, of course, we have got another way, namely, to raise the preference capital. The Reserve Bank has consistently passed two guidelines, allowed banks to raise Tier-II capital. Norms have been laid down for that. Then, there are Tier-III capitals for which norms have been laid down. In some part of Tier-II capital and in some part of Tier-III capital, we will count for capital adequacy. These are very detailed norms laid down by the Reserve Bank. Now, the preference capital can be raised. And, this is one way of augmenting the capital of the bank without diluting the equity of the Government below 51 per cent. Detailed provisions have been made in the amendment Bill. I do not think it is necessary for me to read the detailed provisions, and someone like Mr. Ramachandriah will understand that the provisions are quite detailed, and we have consulted the RBI and the IB. These provisions have been drafted very carefully. So, now, I think, even a bank which is close to 51 per cent like Dena and OBC, which will have the capacity to raise preference capital and augment the capital, in order to keep abreast always, will meet capital adequacy norms. ...(Interruptions)... (Followed by PK/4E)


SHRI SANTOSH BAGRODIA: I am sorry to interrupt. If I am permitted, I would like to say that you can raise 51 per cent capital, but you also have to..(Interruptions).. So, at least, you will be able raise 50 per cent.

SHRI P. CHIDAMBARAM: I have said that; I said that I would have to infuse capital. ..(Interruptions)..

SHRI SANTOSH BAGRODIA: No, you said, preference...(Interruptions)..

SHRI P. CHIDAMBARAM: I said that there are two methods. One is to add to the reserves and the other is to infuse capital. I said that...(Interruptions).. Sir, now, we believe that a bank Director's tenure should not exceed six years, private Directors as well as nominee Directors. One term is of three years, plus, in cases where we think it is appropriate, extended by another three years. I entirely agree with the hon. Members, nobody should become a permanent Director of Bank. I think there should be fresh blood. Fresh style must enter. I am sure there are enough people in this country even among all categories of people. There are enough people, young people, educated people who can contribute to that. That provision is being made now. Some question about branches were raised. I have the figures for all banks' branches. In 2003-04, the total number of branches were 66,970. In 2005-06, that has risen to 68,681. It might appear at first blush that the number of rural branches has come down. Prima facie, you are right, but you have to examine that statement more carefully. The number of rural branches was 32,080 in 2003-04. It appears to have come down to 30,572. Why? By definition, a rural branch is a branch where the population does not exceed 10,000 people. Now, if the population of that place exceeds 10,000 people, it is, automatically, upgraded as a semi-urban branch. Therefore, it is a rural branch, the bank is there, the branch is there, but its category moves from rural to semi-urban. This is number one. Number two, urbanisation is taking place in this country. You cannot deny that; you can't stop it. In fact, in many States, 45 per cent is already urbanised. In about 10 years from today, according to the studies that I have seen, roughly 45 per cent of India would be urbanised. Therefore, more banks and more branches would have to be opened in rural areas because that is where the density of the population is. Sir, it is not as though rural branches are being closed down. In fact, no rural branch can be closed down unless it establishes it is unviable, it is loss-making and obtains the prior permission of the RBI; it cannot be closed down otherwise. Sir, Mr. Tapan Sen asked me, "Why are you dropping the RBI nominee." We are not dropping the RBI nominee. We intended to drop the RBI nominee, but after consultation, we agreed. This answers your question also. We intended to drop the RBI nominee because the RBI said, "I am the regulator; I should not have my nominee on the Board." And I thought that was the persuasive argument. But, then, other friends were even more persuasive. They said, "No, you cannot drop the RBI nominee; we will agree. Let the nominee not be a serving officer of the RBI. Let him be an RBI nominee." So, we struck a compromise. The compromise is that he is an RBI nominee, but not a serving officer of the RBI. The RBI will recommend a set of names to be appointed as nominee from among the people of experience in banking, and one of them will be appointed as nominee. So, I think, we have satisfied both to the extent possible.

SHRI C. RAMACHANDRAIAH: What is the advantage?

SHRI P. CHIDAMBARAM: The advantage is this. I thought I was persuaded by the RBI's case that its nominee should be dropped. But, there are other shades of opinion where they say, "All right, we will accept. Let the RBI officer not be appointed, but let the RBI nominee be also there." As I said, it is a compromise we are making in order to see that there is a consensus so that the Bill can be passed. Let us allow this for some time, and let us see after that.

There was one question about recruitment. I think these are matters which should be left to the banks. The per capita business of a bank is one indicator of a bank's productivity and efficiency. If you look at it that way, the per capita business in public sector banks is lower than the private sector banks and the foreign banks. Therefore, nobody is suggesting retrenchment. (Contd. by 4F/PB)


SHRI P. CHIDAMBARAM (CONTD.): But we must allow the productivity and efficiency of public sector banks to catch up with private sector banks and foreign banks, if they have to remain competitive. It is not that the recruitment has been banned or stopped. There are hundreds of people who are being recruited today, and I will tell you which categories they are. For example, any number of B.Sc. agricultural graduates are being recruited today. The banks are recruiting nearly two hundred, three hundred -- each bank is recruiting -- agricultural graduates. Banks are recruiting today people specialising in computers, software, computerisation and systems. Banks are recruiting people in human resource development. In the old notion of a bank employee, namely, an assistant or a clerk, maybe, there, there is a slow down of recruitment. But specialised categories are being recruited, and after this Government came into office, we have allowed banks full autonomy to recruit specialised category and to fix their scales of pay accordingly. The recruitment is taking place. I can give you any number of examples of specialised candidates being recruited by banks. Sir, Mr. Bhatia has said that public sector banks don't work for a moment beyond four o'clock. It is completely wrong, Mr. Bhatia. Any number of public sector banks have announced 8.00 a.m. to 8.00 pm. banking. Let us not run down our banks. Many, many banks have announced 8.00 a.m. to 8.00 p.m. banking. There are twenty-four hours banking ... ...(Interruptions)...

SHRI VIRENDRA BHATIA: You are mistaken. I said that 'those who have announced that they will work till 4.00 p.m. close at 3.30 p.m. ...(Interruptions)... They are closing their doors, at least, half-an-hour earlier.

SHRI P. CHIDAMBARAM: I am not saying that some branch of some bank closes half-an-hour earlier. ...(Interruptions)... But there are other branches which open half-an-hour later also. ...(Interruptions)... How can you say that? ...(Interruptions)...

SHRI VIRENDRA BHATIA: You don't have practical experience in this regard. I have a practical experience as a customer. You might have been given a preferential treatment. But I know it from my experience and other's experience.

SHRI P. CHIDAMBARAM: I am persuading the banks to become flexible in their working hours. I know banks which have adopted 8.00 a.m. to 8.00 p.m. working hours schedule, namely, Dena Bank, Bank of Baroda, have got many 8.00 a.m. to 8.00 p.m. branches. I know banks which open early in the morning and closes late in the evening. I know banks which remain open for twenty-four hours. There are branches of one bank, which remain open for twenty-four hours. Bank of Baroda has got branches which remain open for twenty-four hours. ...(Interruptions)...

SHRI VIRENDRA BHATIA: There are certain branches of certain banks which remain open even on Sundays. ...(Interruptions)...

SHRI P. CHIDAMBARAM: Therefore, the point you should make is, ... ...(Interruptions)... Just a minute, Mr. Bhatia. You have made your point. The point, you should make is, -- please don't say all public sector banks don't work -- if there is any branch which is not adhering to the announced banking hours, please take action to ensure that they should adhere to it. That I accept. ...(Interruptions)... That I accept. ...(Interruptions)...

Sir, I can't really comment on foreign banks not giving credit card, as Ravi Shankarji has said. I have a credit card of a bank ...(Interruptions)... which has just given me one. ...(Interruptions)... I am answering that. He says, 'he is being denied.' Now, I can't say, why he was denied, or, under what circumstances, he was denied. But all I can say is, there are two things. I am willing to ask the Reserve Bank of India because now there is a new code of banking practices. That has been put in place. All banks have been asked to subscribe to the code of banking practices. This code of banking practice, which is on the Website, contains a large number of guidelines which protect consumer rights. Every bank is required to adhere to this code of banking practices. I will certainly ask the Reserve Bank of India. That has been put on the Website and implemented only about two or two-and-a-half months ago. ...(Interruptions)...

SHRI C. RAMACHANDRAIAH: It came widely in the newspapers.

SHRI P. CHIDAMBARAM: It came in newspapers. I shall certainly ask the Reserve Bank of India. Allow this code to settle down for six months and then find out how many banks are adhering to this code and how many are not adhering to this code. That is one way. The other way is, something which I think all hon. Members should know and the people should know, we have now got banking Ombudsman in place, a completely new revamped Ombudsman scheme, with powers to decide the matter and enforce a decision, has come into being from the 1st of January, 2006. I would urge, you send me complaints. If you send a complaint to me, I will ensure it goes to the Ombudsman today. You can send a complaint to the Ombudsman directly. So, please take these cases to the Ombudsman. If you send it to me, I will send it to the Ombudsman. Let the Ombudsman rap on the knuckles of a few foreign banks and everybody would then behave. There are two ways of ensuring this to happen, and I will see that these aberrations don't take place. (Followed by 4g/SKC)


SHRI AMAR SINGH: Mr. Finance Minister, you may surely find out for yourself that I am not a defaulter! The RBI works under your Ministry, and I pay very hefty income tax. This is not my experience alone; it is the experience of many hon. Members, cutting across party lines -- there is an undeclared theory of foreign banks, in particular -- not the ICICI Bank, I have got wonderful experience with that bank -- that if you are an MP or an advocate...(interruption).. You are both. You are a specially privileged person and that is why you have got one. But all of us have been denied one.

SHRI P. CHIDAMBARAM: All right, I shall look into that. I have said I shall look into that. You have given me the name of the bank, I would reply.

SHRI RAVI SHANKAR PRASAD: It is your onerous duty, as a senior Member, as a Member of Parliament, to protect the dignity of the...(interruptions)...

THE VICE-CHAIRMAN (SHRI DINESH TRIVEDI): I think the hon. Minister has said that he is going to look into it. I don't think you can have anything more than that.

SHRI P. CHIDAMBARAM: I know the name of the bank you have mentioned about. Therefore, I shall find out.

SHRI AMAR SINGH: Sir, I am also a registered lawyer and a member of the Bar...(interruptions).. I am not as successful as you are, but please, protect the dignity; you are both a lawyer and a politician.

THE VICE-CHAIRMAN: He has assured to do that.

SHRI P. CHIDAMBARAM: I said, I shall look into this to see..(interruptions)...

SHRI V. NARAYANASAMY: Mr. Minister, I wish to seek only one clarification. If a politician or a lawyer, after availing the facility of loan, does not repay regularly, how could the bank give it...(interruptions)...

SHRI S.S. AHLUWALIA: That is not right. If a politician takes loan, he would certainly pay it back because he understands what would happen otherwise...(interruptions)...

SHRI P. CHIDAMBARAM: Now, a question was asked as to why are we taking this exceptional power to supersede the bank board. I think this power is necessary; it is not that I am afraid that it will have to be invoked.

Today, as the Acts were drafted, there is no power to even remove a Chairman or Managing Director. You can only quietly and gently nudge him to vacate. There is no such power; he may be appointed for a term, you may take disciplinary action, but there is no power as such. Bank cannot be treated like any other employment. Although Government makes the appointment, you cannot treat it like that, because in any other case you can take disciplinary action, issue show cause notice and hold an inquiry. For banks, you can't do that. If the Reserve Bank comes to the conclusion that there has been grave delinquency, we have to take action that night, there is nothing else you can do. So, there will be a run on the bank the next morning, if I issue a show cause notice to the Chairman of one of the banks. Therefore, this power has been taken. Please, look at the nature of the power; it is a very limited power. It reads, 'Where the Central Government, on the recommendation of the Reserve Bank' -- not suo motu -- 'is satisfied that in the public interest, or for preventing the affairs of any corresponding new bank' -- that is, nationalised bank-- 'being conducted in a manner detrimental to the interest of the depositors or the corresponding new bank or for securing the proper management of any corresponding new bank, it is necessary so to do, the Central Government may, for reasons to be recorded in writing, by order, supersede the Board of Directors of such corresponding new bank for a period not exceeding six months as may be specified in the order.'

Therefore, this is an exceptional power; I think it is necessary to have this power. We can't anticipate what would happen; if the entire board or a section of the board, in the absence of a few board members, meet and take an extraordinary decision, it would have a deleterious impact on the system; I might have tracked it that very night! Therefore, this power is necessary; this power is given to the Reserve Bank of India to recommend. I cannot take suo motu action. When the Reserve Bank recommends and I am satisfied, and then we pass an order in writing, it will, of course, become a public order and you would raise it in Parliament. I think this power is necessary, but I am confident that it would not be necessary to invoke it under the current circumstances or even in the future.

Sir, there was some reference to settlements in BIFR. That is a provision of the SICA, the Sick Industries Companies Act, where consent is required before you can make a sacrifice. But, I think if you go through the CBR mechanism, many cases are settled through this mechanism. If it becomes sick and goes to the BIFR, then, of course, consent has to be taken from every bank.

Finally, Sir, I just wish to say a word about what Dr. Jalan said about the relationship between Government and RBI. I think Dr. Jalan described the relationship very adequately; that is how it has been over the last twenty years or so, to my knowledge. We have never had any confrontation between the Government and the RBI. (Contd. by 4h/hk)


SHRI P. CHIDAMBARAM (CONTD.): In India, we have to balance growth and price stability. The price stability is the first charge of the Reserve Bank of India and growth is the first responsibility of the Government. Therefore, these two goals have to be balanced. Recently, for example, and I just want to conclude with this comment, there is a spate of articles or editorials saying that Government interferes with interest rates. I thought, there can be nothing more ridiculous than double standards. In fact, after talking to the Chairman, Government sent that letter pointing out a number of aspects and said that this must be placed before the Board of Directors, not that we will tell you what the interest rate is. There was an article by the professor of IIM Ahmedabad, and RBI Governor Mr. Reddy called me in that morning and said, "It is a very balanced article. Have you read it?" That article fully supported Government's letter to the banks. What did that letter said? That letter said, "Placed matters before your Board of Directors." Why do I say that? I think, corporate governance requires that Board of Directors must play an active role. What function is more important, when other functions are equally important, in a bank than set it into pace? If that function is not to be taken, not to be discharged by the Board of Directors, then what is the Board of Directors for? We only ask the Board to decide. The Government nominee in the Board merely placed the facts and aspects which have to be considered, and the Board decided in every case; we did not interfere in any case. In the paper, you wrote about Government and Governor are in confrontation. It is the Governor who called me that morning and commended the article, which fully supported the letter which we wrote to the banks. So, I think, this relationship between the Government and RBI will continue in future also, and between the two, they will ensure the banking system to become strong, which supports the economic growth. ..(Interruptions)..

׾ֵ֕ ָ : ָ, ֯ ֵָ ֮ әÙ ֵ -߮ ֟, ֵָ ֵ ... (־֮֬)

ֳ֬ ( פ ס־) : ֯ ֱ ֮ ה ֮֯ ֮ ֌־ פ

׾ֵ֕ ָ : ֵ֟ , ִ ï™ ӡ ֟ ֵָ ֲ ֵ ֵָ ־֮Դ ֵָ , ׸־ ױ ֵָ ֮ כ׾֛ , ѕ ָ֜ և ֋ ֮, әÙ ֮֜ , ׻֋ ױ ֮ ָָ ן ׻֋ ֟ ֺ ?

ֳ֬ : ֮

SHRI P. CHIDAMBARAM: I think the hon. Member is completely misconceived. Nobody seeks the approval of the North Block for deciding what the dividend shall be or what the interest rate shall be. All this is done by the Board of the Bank. That has been so for many years; it will continue so in the future also. Nobody ask the officials of the Finance Ministry for taking these decisions. ..(Interruptions)..

SHRI RAMDAS AGARWAL: Sir, just now hon. Finance Minister has said that whatever decided in the Boards -- interest rate or anything -- is not supposed to go to North Block. Can North Block issue instructions to increase the rate of interest without consulting the banks?

SHRI P. CHIDAMBARAM: We do not and we have not issued such an instruction..(Interruptions)..

SHRI RAMDAS AGARWAL: A circular issued by your Minister. ..(Interruptions).. I thought, I took five Ministers. All that you said was place the matter before the Board of Directors..(Interruptions)..

SHRI C. RAMACHANDRAIAH: Sir, I want to bring to the notice a practical problem. Suppose, a unit becomes sick and it has to pay Rs.60 cores to all financial institutions -- assume 20 financial institutions, which financed its project. Out of Rs.60 crore, Rs.57 crore have been redeemed and only two institutions have not been paid. ..(Interruptions).. These two institutions, to whom Rs.3 crore are being owed, are stipulating a different condition which the management of the sick unit cannot accept because the same condition has to be made applicable to other institutions also. (Contd. by 4j/KSK)


SHRI C. RAMACHANDRAIAH (CONTD): It has been pending since so many months.

SHRI P. CHIDAMBARAM: Sir, that is what I have tried to explain. If you go through the CDR mechanism, not through the BIFR route, if you are not a sick company, if you go through the CDR mechanism, the lead bank in that group of CDR banks will decide it and everybody will accept it. But, if you have become sick in the sense that your net worth has been wiped out and you are a sick company, declared as a sick company by the BIFR, and your case is before the BIFR, that Act requires that every person who is required to make a financial sacrifice, must give his consent. If anything has to be addressed, it must be addressed by amending that Act. If you go through the CDR (Corporate Debt Restructuring) mechanism if you are not a sick company, then you can get a consensus because a lead bank takes the responsibility for persuading all other banks. But, if you become sick....(Interruptions).

SHRI C. RAMACHANDRAIAH: Sir, it became sick some nine years back.

SHRI P. CHIDAMBARAM: I cannot help it if your company has become sick.

THE VICE-CHAIRMAN (SHRI DINESH TRIVEDI): Okay, I think, that has been cleared now. Now, the question is that.....(Interruptions). I think you have had it.

SHRI P. CHIDAMBARAM: Ramachandraiahji, please, see the section in the SICA. The section in SICA says, "No creditor can be asked to make a financial sacrifice without his consent." If this BIFR has given an award, it must have secured the consent of everyone to give an award. I mean, I would show you the section.

SHRI C. RAMACHANDRAIAH: Even to get it executed, they have to approach the...(Interruptions). This is very important. Twenty-eight employees have committed suicide. It has become sick nine years back.

THE VICE-CHAIRMAN: Now, the question is:

That the Bill further to amend the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, the State Bank of India Act, 1955, the State Bank of India (Subsidiary Banks) Act, 1959, the Deposit Insurance and Credit Guarantee Corporation Act, 1961, the Export-Import Bank of India Act, 1981, and the National Housing Bank Act, 1987, as passed by Lok Sabha, be taken into consideration.


The motion was adopted.

THE VICE-CHAIRMAN (SHRI DINESH TRIVEDI): Now, we shall take up clause-by-clause consideration of the Bill.

Clauses 2-19 were added to the Bill.

Clause 1, the Enacting Formula and the Title were added to the Bill.


SHRI P. CHIDAMBARAM: Sir, I beg to move:

That the Bill be passed.

The question was put and the motion was adopted.


SHRI SANTOSH BAGRODIA: Sir, I have a Half-an-Hour discussion, but I know there is a Bill. So, I will request you to take up the Bill first, and then, we will take up the discussion.











* Pp 536 Onwards will be issued as Supplement.







SHRI SANTOSH BAGRODIA: Sir, I have a Half-an-Hour discussion, but I know there is a Bill. So, I will request you to take up the Bill first, and then, we will take up the discussion.





That the Bill further to amend the Salary, Allowances and Pension of Members of Parliament Act, 1954, as passed by Lok Sabha, be taken into consideration.

Sir, this Bill is due to the compulsion of five-year term extension of the Salary, Allowances and Pension of Members of Parliament Bill, which we passed earlier in 2001. Sir, as you know, the Salary, Allowances and Pension of Members of Parliament Bill is governed by article 106 of the Constitution. And, article 106 left this power to the Parliament. The Parliament, accordingly, composed Joint Committee of Members of both the House to examine the whole aspect and to recommend to the House and the Cabinet as to what should be the allowances and salaries of the MPs, from time to time. Sir, in the recent times, there was lot of debate in the media and many other areas as to whether MPs are taking more advantage and rest of the nation does not like it. That kind of a perception has been built. When MPs' issue regarding salaries, allowances, etc., comes, it appears to become the most juicy and choosy item for the media, especially the electronic media. But, the reality is altogether different. I first thank the Joint Committee, which worked so hard calculating all the details of world Parliaments, and I can say, Sir, Indian MPs represent the highest number of population in the world in a particular segment of Lok Sabha, and accordingly, those, who are in the Rajya Sabha, also represent State Assemblies by their support. (continued by 4k)


SHRI PRIYARANJAN DASMUNSI (CONTD.): And, therefore, I tell you, Sir, that MPs of India still rank lowest in estimation of the developed nations of the world democracies. It is the position still today, Sir, with all facts and figures. Unfortunately, a section of Indian media, the electronic media, never projected and placed it.

Sir, in 1971, when I became a Member of Lok Sabha for the first time, I remember I went to the United Kingdom as part of Commonwealth delegation. The British Member of Parliament in the House of Commons asked me a few questions. Do you have office in your constituency? I said, 'no'. Do you have office in Delhi? I said, 'no'. Do you have a transport to tour? I said, 'no'. Do you have a Personal Secretary? I said, 'no'. He asked, how do you function? I said, we go to the people, come back, collect their papers, and, write to the Minister. He said, it is very absurd. It was in 1971. I remember, there was a stenographic pool here and I had to wait in queues for hours together to get one letter typed. Those days are gone. In 2001, rightly my predecessor, Pramod Mahajanji, brought the legislation based on the recommendations of the Joint Committee of Parliament on the Consumer Price Index, and, from Rs. 4,000, the salary was increased to Rs. 12,000. He gave that logic of the day which was absolutely correct. Sir, why did I come forward today? Sir, the existing salary and allowances are effective up to 14th September, 2006. The problem is that if it is not passed before that and it expires at 12'o clock in the night on 14th September, then we go back to Rs. 4,000/-.

Last time, the Government said that it would be for a period of five years and after five years, Parliament would review and come back with the proposal and then the Government would consider.

Accordingly, the Committee gave this suggestion and the recommendation. I took it to the Cabinet. The Cabinet considered the whole aspect, not fully. My dear friend, Mr. Chidambaram, did not agree to all the recommendations but substantial part was accepted, and, I was duty bound to come before both the Houses and explain it. Therefore, Sir, I would like to submit that I thank all the Members who have worked hard. Sir, nobody just tries to understand the condition of an MP of India. All these perks and facilities are not an MPs privilege. I personally said yesterday in the House that when an MP renders real justice to a petition of an electorate, which includes taking the papers, scanning it, typing it, sending it to the concerned Ministry, following it up, talking to the officer or the Minister, the total cost which he has to pay for one petition is Rs. 65. Every month, an MP entertains, at least, a minimum of 20 such important petitions of the public to deal with. Not only this, for travelling in the constituency to meet the people, and, according to India's basic modest standard of hospitality, you have to offer them, at least, a cup of tea, or, when you go, they give you food; you also have to share sometimes. We know, in the social life, there is a compulsion. People have a feeling that if I go to an MPs House, he will rescue me. Be it a heart patient; be it a helpless daughter, her father will come and say, I have to arrange her wedding, please do something. All sorts of social obligations are complied with by the MLAs and the MPs of the respective States. No DMs, SDOs, or, the bureaucrats come forward and say, 'All right'. They also say to the people, go to the MPs House. (Interruptions) No, no. I am not joking. This is the fact. Each one has to face the music, and, if one cannot do it, the media will write, ֤ 00 ֵ, ֮ ָ ׮ֻ פօ This also happens. Therefore, this is a peculiar situation of how the Indian Parliamentarians function. Therefore, reform in the whole thinking, reform in the whole apparatus is required. Recently when I went to Germany, our Speaker also went there, I was surprised that each of the German MPs has, in the Bunde Stag, well-built office, with the support of the secretariat and transport. And, in Britain, they have it both in the Constituency as also in the city of London, in Westminster itself. In Singapore, in Malaysia, and, Sir, I found more advantages given to the Sri Lankan MPs than Indian MPs. (Contd. by SK-4l)


SHRI PRIYARANJAN DASMUNSI (CONTD.): Therefore, Sir, it is a very surprising thing that we always feel a little shy that we are drawing this allowance or that allowance. We are not drawing much; it is nothing. What is the salary and perks of the Commissioner of Police? Less than what you get here, much less than that. Therefore, Sir, I tell you that the Committee's recommendation is not to make us rich, but to give us the bear minimum. I know, in the present perception, people will say that farmers are committing suicide, so and so is doing that, etc. That is the duty of the Government of the day to think how to handle that, how to invest more money for the social sector. But, when people from that social sector suffer, their works are being done in terms of legislation from this side or raising the issues from that side by the people who represent them, by the MPs. How are they doing so? Sir, I am not questioning the bona fide of any media to criticise us. But, these days, there are a lot of T.V. anchors who get Rs. 2 lakhs or Rs. 3 lakhs or Rs. 5 lakhs, and, that too, on contract. It varies from channel to channel. They do not employ people in terms of provident fund and bonus, just in vouchers. If I am happy with you, stay with me, or, get out; go to others. But here, a Member of Parliament, if somebody visits his house in the morning, and even I request the electronic media to send your sting camera persons to his house to have a sting operation and see for themselves how the people from his constituency come to an MP and how he handles their problems, or, at least, show how they face them. Therefore, Sir, it is wrong to say that Indian Parliamentarians are looting money, robbing money and getting it for themselves. It is not correct at all. I have made my own study. Seventy eight per cent of the MPs of the first Lok Sabha were from the freedom fighters' families. In second to fifth Lok Sabha, 85 per cent of the MPs were from school-teachers or from the working class or from the farming community. Sir, today also, I say with responsibility, combining both the Houses, except two to three per cent, who are from the higher strata of the society, like my dear friend, Rahul Bajaj and others, all the rest are dedicated to the public life at best, and most of them are advocates. And, when they come here, they lose their profession, like Ravi Shankar Prasadji. Therefore, Sir, it is not something big we are talking, something big we are doing. We have done a modest exercise. The Government has accepted only one suggestion. The Joint Committee made a recommendation, a new one: Should the Parliament decide their salary, or, should somebody else do it? This was also a suggestion of the hon. Speaker and the others. Sir, there are two opinions in this regard. One, often we say that the Parliament is supreme. Parliament is for legislation. Anywhere you do, it is to be legislated by the House. Should Parliament's privilege be scanned and scrutinised by an authority outside Parliament? That was the thing. The other one is: Should Parliament evolve a collective mechanism as a permanent institution, instead of ad hoc measure of five years? So, Sir, the Joint Committee recommended that the Government should consider working of the modalities of a permanent mechanism for determination of salaries and allowances of MPs, in consultation with the Chairman of Rajya Sabha, the Speaker of Lok Sabha and the leaders of recognised political parties in both Houses of Parliament and bring a suitable legislation before the Parliament. I am happy to inform the House, the Government has agreed, in principle, to set up a permanent mechanism for recommending the salary and allowances of the Members of Parliament. A suitable amendment to the Salary, Allowances and Pension of Members of Parliament Act, 1954, for this purpose, will be brought in the next session of Parliament. Since the Joint Committee has already made a recommendation of five years regarding the salary and allowances, it is proposed to amend this Act to give effect from 14th September, 2006 for five years and from the 15th Lok Sabha, when it sill be constituted, this permanent mechanism will be built for all years to come so that advocacy will be over. So, that is what the decision of the Government is. Now, I would like to inform what are the provisions in this Act. The existing provision regarding salary and allowances shall expire on 14th September 2006. Naturally, the Act is necessary. Sir, we received the Report of the Joint Committee. I would not like to go into details now. After due consideration, the Government has decided to implement most of the recommendations, and its proposals are as follows:

(contd. by 4m)


SHRI PRIYARANJAN DASMUNSI (CONTD.): Salary is being raised from Rs.12,000 per month to Rs.16,000 per month. Tax, not on salary yet, but on income from other sources. Sir, daily allowance is being increased from Rs.500 to Rs.1000 for each day during the period of residence on duty. The increase of salary and daily allowance will be effective from 14th September 2006 for five years or until fixed.

The road mileage is being raised from Rs.8 per kilometre to Rs.13 per kilometre.

A member who is physically incapacitated and cannot travel by rail or air, for reasons known to him and his doctor, will be entitled to perform the entire journey by road and claim the road mileage at the rate of Rs.13 per kilometre. The physically incapacitated Member will also be entitled to travel facility by road along with a companion in lieu of the travel facilities by rail or air for the Member and the companion and may claim the road mileage at the said rate.

In order to entitle the Members to travel more frequently during the interval of two sittings of the Parliamentary Committees, particularly during the break period of Budget Session, and claim travelling allowance, it is proposed to accept the recommendation of the Joint Committee to reduce the period of interval from seven days to five days.

Air journeys from any place in India at present for a Member of Parliament in a year are 32. We have increased it to 34 on the recommendation of the Committee. The Members will also be entitled to carry forward the unutilised air journeys for the remaining term and to adjust eight excess air journeys against the next year's entitlement.

Sir, ex-Members of Parliament, who are really in a very pitiable condition, dedicated social activist, come to the Annexe, to our State and sit in the Central Hall. Sir, I cannot describe their position. Some of them are on the brink of begging for their daughters' education. Even I knew an ex-Member of Parliament, who kept his wife admitted to the AIIMS, then started knocking on the doors of Members of Parliament to get Rs.1,000 or Rs.500 or Rs.200. Therefore, Sir, we have categorised ex-Members of Parliament into two categories. One, those who are from Andaman and Nicobar Islands and Lakshadweep, shall be entitled to have the facility of travel by streamer always. At present, the pension is Rs.3000 per month. After his death, his wife gets or the dependent gets Rs.1500 only for two years. Sir, I proposed it to the Cabinet and the Cabinet agreed to raise it to Rs.8,000 per month. The additional pension for each year in excess of five years, is being raised from Rs.600 to Rs.800 per month. Fifty per cent of that shall be the family pension, not for two years, but for life. Sir, this shall provide a great relief to those social activists and ex-Members of Parliament who are really in trouble.

Sir, apart from these amendments, there are some proposals which will be covered by Rules and not by the Act, as per the practice of Parliament. These are as follows;-

Constituency allowance of the Members will be raised from Rs.10,000 to Rs.20,000 per month.

Members of Parliament, at present, are entitled to office expense allowance of Rs.14,000 only per month. Sir, there have been complaints from various quarters that they are not able to get even a good computer operator for Rs.5,000. And an assistant these days does not work for less than Rs.4000. The Members of Parliament, at present, are entitled to office expense allowance of Rs.14,000 per month. This is being raised to Rs.20,000 per month. Of which, postage is being raised from Rs.1,000 to Rs.2000 per month; stationery from Rs.3,000 to Rs.4,000 per month; and staff assistance from Rs.10,000 to Rs.14,000 per month (Rs.10,000 for a computer assistant in Delhi and Rs.4,000 for an assistant in the constituency). So, it will be raised from Rs.14,000 to Rs.20,000. It is enhanced by Rs.6,000 only.

Sir, as per the Housing and Telephone Facility Rules, 1956, a Member of Parliament is entitled, without payment of charges, to a maximum of 50,000 units of electricity and 4,000 Kilolitres of water per annum in respect of his accommodation in Delhi. (Contd. by VKK/4N)