InvestorQ : How do you see the Banking Regulations modification and also the tweak to labour laws by the Indian government?
diksha shah made post

How do you see the Banking Regulations modification and also the tweak to labour laws by the Indian government?

Answer
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4 weeks ago


Apart from the Farm Bill, the government passed two more important legislations. The first pertains to banking regulation. The Banking Amendment Act of 2020 makes two key changes. Both are intended to make the banking system safer and reduce systemic risk.

Firstly, RBI can now initiate scheme of reconstruction and amalgamation of any bank without placing it under moratorium. This can prevent a situation like Yes Bank where the delay led to a run on the deposits and huge losses to equity investors.

Secondly, the Bill also envisages bringing majority of the cooperative banks under the ambit of RBI regulation from now onwards. This was called for, especially after PMC Bank fiasco last year. While bandwidth is an issue, many agri cooperatives will still remain outside.

The other major, and perhaps most controversial bill, was the labour bill. It became controversial as it makes “Hire and Fire” a lot easier for industry. In fact, FDI flows were held up for this very reason. This could prove to be a boost for FDI, but unions could see their wings clipped.

The second big change was to make industrial strikes difficult and expand gratuity facility to contract workers. Women will now be allowed to be employed even in night shifts. But units with up to 300 workers can now follow hire and fire without any encumbrances.