72 amendments to Companies Act approved: FM

Seventy two changes to the Companies Act 2013 have been approved by the Cabinet. Briefing reporters, Corporate Affairs Minister Nirmala Sitharaman said the priority is to “decriminalise” provisions in the Act. Sitharaman, who is also the Finance Minister, said the Cabinet has approved 72 changes to the Act. As many as 23 offences would be recategorised out of 66 compoundable offences under the Act. Besides, seven compoundable offences would be omitted, she said.

Sitharaman said the government would remove provisions of imprisonment in various sections and also reduce penalties in case of various compoundable offences.

She also said companies having CSR obligation of less than Rs 50 lakh would not have to constitute a CSR committee.

These initiatives, Sitharaman said, are aimed at ease of doing business.

In November, a government-appointed high level panel proposed decriminalising more than half of the existing compoundable offences under the companies’ law as well as lower monetary penalties for violations by start-ups, amid efforts to further improve the ease of doing business in the country. Generally, compoundable offences are those which can be settled by paying certain amount of money.

The Union Cabinet, on Wednesday approved the mega consolidation of ten public sector banks (PSBs) into four that would result in creation of seven large PSBs with each amalgamated entity having a business of over Rs 8 lakh crore.

Sitharaman said the Centre has been in regular touch with these banks. There will be no regulatory issues, she said. “The banks’ merger is on course and decisions have already been taken by the respective bank boards,” she added.

Sitharaman said after the earlier amalgamation and the decision made on Wednesday, the country will now have only 12 banks. “We think that the core banking functions and every service of these banks will be intact,” she said adding it was found that after the earlier amalgamation of banks with the Bank of Baroda, the retail loan sanctioning time has come down 23 days to 11 days and operating profit and capital ratio have gone up.

The mega consolidation would help create banks with scale comparable to global banks and capable of competing effectively in India and globally. Greater scale and synergy through consolidation would lead to cost benefits which should enable the PSBs enhance their competitiveness and positively impact the Indian banking system, a release said.

In addition, consolidation would also provide impetus to amalgamated entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity, it said.

The adoption of best practices across amalgamating entities would enable the banks improve their cost efficiency and risk management, and also boost the goal of financial inclusion through wider reach. Further, with the adoption of new technologies, access to a wider talent pool, and a larger database, PSBs would be in a position to gain competitive advantage by leveraging analytics in a rapidly digitalising banking landscape, the release added.

In the biggest consolidation exercise in the banking space, the government in August 2019 had announced four major mergers of PSBs, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.

Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda.