Draft norms for new banking licences likely this week
29 Mar 2011
The Reserve Bank of India is likely to put forward draft guidelines for new banking licences in the next few days, finance ministry official R Gopalan.
''The RBI will come up with the guidelines by the end of this month,'' Gopalan, secretary in the department of economic affairs, said. The finance ministry will review the guidelines, and comments will be invited from the public before they are notified.''
India's big businesses, ever eyeing greener fields, are almost holding their breath to expand into banking. In the budget for 2010, finance minister Pranab Mukherjee had announced that more banking licences would be issued to corporate houses. In this year's 2011-2012 budget, he said RBI would be ready with the draft guidelines by March.
The RBI had brought out a discussion paper in August 2010 on licences to business houses and non-banking finance companies. It sought to know ''whether industrial and business houses could be allowed to promote banks''; and potential investors' views on whether non-banking finance companies (NBFCs) should be allowed to become full-fledged banks.
The government has also introduced in Parliament a banking laws amendment bill, which seeks to empower RBI with powers to supersede the board of a bank -- a step up from the present provision that only allows it to remove directors and executives. The central bank is also expected to be armed with powers to ensure that control of a bank is in the hands of "fit and proper persons".
Several cash-rich companies plan to enter the banking sector and are awaiting the guidelines. These include entities such as Reliance Capital, IndiaBulls, Religare, IL&FS, IDFC, IFCI and Aditya Birla Financial Services are among those keen to enter the field.
