Aiming at an umbrella act to avoid conflicts between the Companies Act, the Banking Regulation Act, SBI Act, SBI Subsidiaries Act and the Bank Nationalisation Act, the government is planning to table an omnibus act in parliament this week.

This follows sweeping changes recommended by the working groups of the Reserve Banking India and the Union government.

Major points on the agenda include changes in the capital and management structure of banks, rationalisation of norms related to valuation of shares on merger of banks and leaving both the statutory liquidity ratio and the cash reserve ratio exemptions to the discretion of the banks.

The recommendations mooted by various working groups set up by the RBI and the government include reduction of mandatory shareholding of the government in the banks from 51 per cent at present to 33 per cent.

Similarly, the shareholding of the RBI in the State Bank of India is to be capped at 33 per cent as against the present holding of more than 60 per cent.

These recommendations have been made to pave way for mergers & acquisitions within the banking industry which at present get stifled in legal hassles.

Specifically to allow the offshore banking units of various banks exemptions in SLR, there is a proposal to leave SLR exemption to the discretion of the RBI. The RBI already has powers to exempt CRR fully.

In order to streamline the differences between the Companies Act and the Banking Regulations Act, it is proposed that the valuation of minority shareholding while deciding the swap ratio during the merger of banks should be left to the discretion of the market.

At present, RBI does the valuation of the minority shareholding as against the provisions of the Companies Act whereby swap ratio is decided at an extraordinary general meeting.

The Banking Regulation Act, if amended, will also result in a broad-basing of the management structure of the banks.

It proposes to split the post of chairman and managing director into two: the chairman will supervise the board and a managing director will be in charge of overall operations. There will be two posts of executive directors in place of one.

Further, according to the proposal, the penalty for violating the banking regulation guidelines has been increased to "a few crore" compared with a paltry Rs 500,000 now.