The new banking entity to be formed after the repealing of the Industrial Development Bank of India (Transfer of Undertaking and Repeal) Bill 2002 will be given an exemption from maintaining the statutory liquidity ratio for five years from the appointed date.
The Bill was referred to the Standing Committee of Finance, which recommended some regulatory forbearances such as exemptions from maintenance of cash reserve ratio for five years and certain tax exemptions for the newly converted banking company, according to Reserve Bank of India's "Report on Trend and Banking in India 2002-03" released in Mumbai on Monday.
On the date to be decided by the government, IDBI Act would stand repealed and the undertaking of IDBI would vest in the company to be called 'Industrial Development Bank of India Ltd', it said.
The new company would be deemed to be a banking company under Section 5(C) of the Banking Regulation Act, 1949, and carry on the banking business as per the provisions of the Act and was not required to obtain licence from RBI.
The Cabinet approved the amendments to the Bill on August 11, 2003, so as to ensure that the new banking company also continues to a development bank, which would provide term lending to large, medium and small industries, it added.