Tuesday, February 15 2005 18:29 Hrs (IST) - World Time -

New Delhi: Cautioning the UPA (United Progressive Alliance) Government on adverse implications of banking reforms, the four Left parties said today (Feb 15, 2005) they will oppose the proposed FDI hike up to 74 per cent in private banks and easing of voting rights.

"Any effort to bypass the Parliament, by adopting the notification route invoking Section 4 of Banking Regulation Act (BRA), will be met with opposition," CPM (Communist Party of India-Marxist), CPI (Communist Party of India), RSP (Republican Socialist Party) and Forward Bloc said in a 13-page joint note sent to the Government.

Notifying the dilution of BR Act, allowing acquisition of shares above the existing RBI guidelines by foreign investors and subsequently presenting the amendment in Parliament as a "fait accompli" would not be acceptable, it said.

Citing RBI's draft guidelines issued on February 3, 2004, it said any acquisition over five per cent was not allowed and voting rights restrictions and other related provisions of the BR Act should continue to be applicable.

Referring to the National Common Minimum Programme, which states that the social obligations imposed by the regulatory bodies on private banks will be monitored strictly, the Left said, "Can the Government abide by this commitment if the foreign and private ownership norms of banks are diluted?"

Asking the Government to increase the efficiency of the banking system within the existing regulatory framework, the Left parties said funds should go to credit-starved rural areas, particularly into agriculture and not agri-business.

"It is unfortunate that the UPA Government has chosen to carry forward the policy of the banking deregulation following the footsteps of the NDA Goverment, despite the cautious approach adopted by the RBI," it said.