Economy News Notes:

The Parliamentary Standing Committee on Finance has differed with the government's proposal to extend voting rights to investors in private sector banks to the extent of their shareholding.
Instead, it has recommended a hike in investors' voting rights with a cap of 26 per cent to maintain a balance between economic control and promotion of corporate democracy.
Banking Laws (Amendment) Bill, 2011, had proposed raising the voting rights of investors, now capped at 10 per cent, to levels commensurate with their shareholding in private sector banks.
the panel also suggested that the Reserve Bank of India should ensure that the regulatory mechanism is adequate and strictly complied with to prevent any misuse of the provision of increasing the limit.
Being the banking sector's nodal agency, the apex bank should conduct due diligence of ‘fit and proper persons/entities' and also take sufficient safeguards while stipulating conditions as to credentials, source of funds, track record, financial inclusion, before granting approvals under this clause
The panel agreed with the government's proposal to keep bank mergers outside the purview of the Competition Commission of India (CCI) temporarily
On the proposed Depositor Education and Awareness Fund as provided in the Bill, the panel suggested that such a fund should be created without compromising the rights and claims of depositors or their legal heirs who should be able to secure their claims without difficulty.

Parliamentary Standing Committee on Finance has shot down a major reform proposal to raise the FDI cap in insurance to 49 per cent.
the panel headed by BJP leader and former Finance Minister (during NDA regime) Yashwant Sinha maintained that the move to hike the FDI cap may not have the desired effect and could expose the economy to global vulnerability.
The Panel pointed out that while opening up the insurance sector to foreign investment in 1999, Parliament was given an assurance that the statutory prescriptions as also the foreign investment regulations would ensure that the cap of 26 per cent on foreign equity participation in insurance companies would not, in any way, be breached.

The Fertilizer Association of India (FAI) has asked the government to create a $20-billion Sovereign Wealth Fund to acquire mineral assets abroad.
Global suppliers, especially in the case of potash, have formed cartels and have been increasing fertilizer prices. This is leading to a rise in input costs and the domestic firms are left with no option but to share the burden with the farmer
The Working Group on Mineral Exploration and Development (other than coal and lignite) for XII Plan (2012-17) has emphasised on public-private partnership for the acquisition of fertilizer assets abroad.
The Planning Commission has also suggested setting up of a sovereign wealth fund with an initial corpus of $10 billion , mainly to invest in energy and mining assets abroad.