Protecting bank nationalisation

The Union Cabinet to-night [February 12, New Delhi] decided to issue an ordinance to restore the status quo ante in regard to the nationalisation of the 14 banks, following the Supreme Court judgment last Tuesday invalidating the Bank Nationalisation Act of 1969. The ordinance will be issued to-morrow. The ordinance will meet the “twin” objections of the Supreme Court to the Act that was struck down, namely, hostile discrimination against the 14 major banks and payment of compensation. There is expected to be another Cabinet meeting tomorrow prior to the issue of the ordinance which is being drafted. It is reliably learnt that the ordinance will provide for the acquisition of the shares in the 14 banks nationalised in July last. It is also learnt that no further extension of nationalisation to other banks, Indian and foreign, is being contemplated. The Law Ministry is understood to be studying the bearing of the Supreme Court’s judgment on other matters – the reference is clearly to general insurance. The Cabinet discussion on the bank issue lasted for over two hours. The Cabinet met after the Prime Minister, Mrs. Indira Gandhi had talks with leaders of Opposition groups. The Cabinet discussed the proposal for an ordinance mooted by the Ministry of Law in consultation with the Finance Ministry.

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