Hon’ble Members are aware that Government constituted the Financial Sector Legislative Reforms in 2011. I am informed that the report will be presented next month. It is our intention to examine the recommendations and act quickly and decisively so that our financial sector stands on sound legal foundations and remains well-regulated, efficient and internationally competitive. I propose to constitute a Standing Council of Experts in the Ministry of Finance to analyse the international competitiveness of the Indian financial sector, periodically examine the transaction costs of doing business in the Indian market, and provide inputs to Government for necessary action.
Banking
Our public sector banks are well regulated; they must also be adequately capitalised. Before the end of March 2013, we shall provide Rs 12,517 crore to infuse additional capital into 13 public sector banks. In 2013-14, I propose to provide a further amount of Rs 14,000 crore for capital infusion. We shall ensure that public sector banks always meet the Basel III regulations as they come into force in a phased manner.
Financial inclusion has made rapid strides. All scheduled commercial banks and all RRBs are on core banking solution (CBS) and on the electronic payment systems (NEFT and RTGS). We are working with RBI and Nabard to bring all other banks, including some cooperative banks, on CBS and e-payment systems by 31.12.2013. Public sector banks have assured me that all their branches will have an ATM in place by 31.3.2014.
Women are at the head of many banks today, including two public sector banks, but there is no bank that exclusively serves women. Can we have a bank that lends mostly to women and women-run businesses, that supports women SHGs and women’s livelihood, that employs predominantly women, and that addresses gender related aspects of empowerment and financial inclusion? I think we can. I, therefore, propose to set up India’s first Women’s Bank as a public sector bank and I shall provide Rs 1,000 crore as initial capital. I hope to obtain the necessary approvals and the banking licence by October, 2013, and I invite all Hon’ble Members to the inauguration of the bank shortly thereafter.
The Rural Housing Fund set up through the National Housing Bank is used to refinance lending institutions, including RRBs that extend loans for rural housing. So far, 400,000 rural families have taken loans. In the last Budget, we provided Rs 4,000 crore to the Fund. In consultation with RBI, I propose to provide Rs 6,000 crore to the Rural Housing Fund in 2013-14.
Similarly, it is proposed to start a fund for urban housing to mitigate the huge shortage of houses in urban areas. I propose to ask National Housing Bank to set up the Urban Housing Fund and, in consultation with RBI, I propose to provide Rs 2,000 crore to the Fund in 2013-14.
Insurance
A multi-pronged approach will be followed to increase the penetration of insurance, both life and general, in the country. I have a number of proposals that have been finalised in consultation with the regulator, IRDA.
Insurance companies will be empowered to open branches in Tier II cities and below without prior approval of IRDA.
All towns of India with a population of 10,000 or more will have an office of LIC and an office of at least one public sector general insurance company. I propose to achieve this goal by 31.3.2014.
KYC of banks will be sufficient to acquire insurance policies.
Banks will be permitted to act as insurance brokers so that the entire network of bank branches will be utilised to increase penetration.
Banking correspondents will be allowed to sell micro-insurance products.
Group insurance products will now be offered to homogenous groups such as SHGs, domestic workers associations, anganwadi workers, teachers in schools, nurses in hospitals etc.
There are about 10,00,000 motor third party claims that are pending before Tribunals/Courts. Public sector general insurance companies will organise adalats to settle the claims and give relief to the affected persons/families.
The Insurance Laws (Amendment) Bill and the PFRDA Bill are before this House. I sincerely hope that Government and the Opposition can arrive at a consensus and pass the two Bills in this session.
The Rashtriya Swasthiya Bima Yojana covers 34 million families below the poverty line. It will now be extended to other categories such as rickshaw, auto-rickshaw and taxi drivers, sanitation workers, rag pickers and mine workers.
A comprehensive and integrated social security package for the unorganised sector is a measure that will benefit the poorest and most vulnerable sections of society. The package should include life-cum-disability cover, health cover, maternity assistance and pension benefits. The present schemes such as AABY, JSBY, RSBY, JSY and IGMSY are run by different ministries and departments. I propose to facilitate convergence among the various stakeholder ministries/departments so that we can evolve a comprehensive social security package.
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