Friday, August 12 2005 14:54 Hrs (IST) - World Time -

New Delhi: There is no proposal with the Government to amend the Banking Regulations Act to ensure that foreign banks keep more than 20 per cent of their net profit for the year with Reserve Bank of India, Finance Minister P Chidambaram said in Lok Sabha today (August 12, 2005).

Observing that the Act provides that foreign banks have to keep 20 per cent of their net profit for the year in respect of all business transacted through their branches with RBI, he said during Question Hour that there is no proposal to enhance the limit at present.

The remittance of profits by 30 foreign banks, operating in the country, to their head offices abroad has come down from Rs 901.61 crore in 2003-04 to Rs 297.47 crore in 2004-05. The amount in 2002-03 was Rs 390.37 crore, he said.

He said the foreign banks have to keep 20 per cent of their net profit each year with RBI either in cash or in the form of unencumbered approved securities or partly in both these forms.

Asked by Ajoy Chakraborty (Communist Party of India) whether the Government was in talks with foreign banks to invest in the flood-ravaged Mumbai's infrastructure, Chidambaram replied in the negative but said if the State Government forwarded bankable proposals for the purpose, he would take it up with all banks including the foreign ones.

To another question, Minister of State for Finance, S S Palanimanickam, said the public sector banks have recorded operating profit of Rs 38,413 crore in 2004-05 as against Rs 39,475 crore in 2003-04. Net profits of some of these banks have also declined during the period.