Mumbai: Shares of non-banking financial companies (NBFC) and banks on Tuesday surged as much as 14 percent after the Lok Sabha passed a Bill paving way for foreign investments in the sector and establishment of new private banks.
    
Shares of Edelweiss Financial Services soared by 13.96 percent to Rs 40, while Religare Enterprises zoomed up by 9.71 percent to Rs 342.70 on the BSE.
    
Among others, Bajaj Finserv was up 4.79 percent, Mahindra and Mahindra Financials rose by 3.41 percent, Shriram Transport Finance (3.16 percent), IDFC (2.69 percent) and L&T Finance Holdings (1.62 percent).
    
In the banking space, Bank of India was trading higher by 1.54 percent and SBI (0.47 percent).
    
"The long-awaited passing of Banking Bill is an important step towards reforming India's financial sector and greater financial inclusion," Chairman and CEO of Edelweiss Group Rashesh Shah said.
    
The Bill will allow RBI to supersede boards of private sector banks and increase the cap on voting rights of private investors in PSBs to 10 percent, from 1 percent.
    
RBI wanted the government to amend the banking laws before starting the process towards issuance of new banking licences.
    
According to Religare Capital Markets report, "The approval of Banking Bill is positive as it would strengthen RBI's regulatory oversight over banks and pave way for new banking licences. Increase in voting rights for private sector banks to 26 percent from 10 percent at present is also incrementally positive in our view."

PSU banks threaten to go on strike

Four bank employees unions have threatened to go on strike on Thursday to protest against the proposed Banking Laws (Amendment) Bill and mergers of the banks.
     
"If the strike materialises, a section of the bank's employees may take part in the proposed strike on the said date (December 20), in which case, the normal functioning of the branches or offices of the bank may get affected," Indian Bank said in a filing on the BSE.

(Agencies)

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