Lok Sabha passes NABARD (Amendment) Bill, 2017

The Lok Sabha has passed the National Bank for Agriculture and Rural Development (Amendment) Bill, 2017 by voice vote. The Bill seeks to amend the NABARD Act, 1981.
NABARD is responsible for providing and regulating facilities like credit for agricultural and industrial development in the rural areas.

Key Features of the Bill

Increase in capital of NABARD:  The Bill allows Union Government to increase capital of NABARD to Rs 30,000 crore from Rs. 5000 crore. Further, it allows Union Government to increase it to more than Rs 30,000 crore in consultation with the RBI, if necessary.
Transfer of the RBI’s share to Union government:  The Bill provides that the Union Government alone must hold at least 51% capital share of NABARD. Further, it transfers share capital held by the RBI valued at Rs 20 crore to the Union Government. Currently RBI holds 0.4% of the paid-up capital of NABARD and the remaining 99.6% is held by the Union government and this causes conflict in the RBI’s role as banking regulator and shareholder in NABARD.
Adds Micro, small and medium enterprises (MSME) terms:  The Bill replaces the terms ‘small-scale industry’ and ‘industry in the tiny and decentralised sector’ with the terms ‘micro enterprise’, ‘small enterprise’ and ‘medium enterprise’ as defined in MSME Development Act, 2006.  Further, it allows NABARD to provide financial assistance to banks if they provide loans to the MSMEs.
Consistency with the Companies Act, 2013: The Bill substitutes references to provisions of the Companies Act, 1956 with references to the Companies Act, 2013. It includes provisions dealing with definition of a government company and qualifications of auditors.

Month: Current Affairs - August, 2017