In an attempt to attract foreign direct investment in the banking sector, government decided to remove the 10 per cent ceiling on the voting rights of foreign investors in banks.

The Union Cabinet has decided to suitably amend the Banking Regulation Act to give voting rights to foreign investors in proportion to their equity holding.

"A bill to amend the Banking Regulation Act, 1949, will be introduced in the post-recess Budget session," Minister for Parliamentary Affairs and Health Sushma Swaraj said.

The Cabinet decision is in line with the announcements made by Finance Minister Jaswant Singh in the Budget for 2003-04.

The Budget had also increased the FDI limit in private sector banks from 49 per cent to 74 per cent. The latest move is part of the ongoing banking reforms and is in keeping with the hike in FDI limits.

The present ceiling of 10 per cent on voting rights for foreign stakeholders is irrespective of the shareholding of investors.

To curb cross-voting and use of money power in Rajya Sabha polls, the Cabinet also decided to amend electoral laws and provide for open voting instead of a secret ballot for the Rajya Sabha.

It also decided to allow a person from anywhere in India to contest Rajya Sabha elections, doing away with the present clause that a candidate has to be a resident of a particular state to seek election.

The Representation of People Act will be amended. A new bill, incorporating these provisions, will be introduced in the second half of the Budget session, Swaraj said.

"The Bill will substitute the existing secret ballot system with an open ballot system for elections to the Rajya Sabha," she said.