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  3. RBI will announce new bank licensing guidelines within fortnight: FM

RBI will announce new bank licensing guidelines within fortnight: FM

31 Jan 2013 Evaluate

In positive news to corporate houses interested in entering the banking business, Finance Minister P Chidambaram has said that, the Reserve Bank of India (RBI) will announce new bank licensing guidelines within a fortnight, under which four-five licences are likely to be given to private sector entities.  “In two weeks from today, the RBI will announce the final guidelines for licensing more private sector banks.” By adding further Chidambaram said no eligible corporate entity should be denied opportunity to enter the banking space.

A number of large corporate houses, including Anil Ambani-led Reliance Group, financial conglomerate Religare and Shriram Groups, engineering-to-technology major L&T group and Aditya Birla Group, have reportedly evinced their interested in entering the banking business depending on the regulatory framework. 

Moreover, Chidambaram also said that India has been liberal in granting branches to foreign banks more than what ‘we are required to do under the WTO regulations.’ He also dispelled the impression that public sector banks were an obstacle to financial liberalisation.

The central bank on its draft guidelines for licensing more private sector banks has received comments from various stakeholders and is currently working on final norms. In August 2011, the draft set of guidelines was issued.

The draft licensing guidelines published by the RBI propose to remove the previous prohibition that precluded 'industrial houses' from promoting or controlling Indian banks. The guidelines also propose to allow non-banking financial companies the option of converting themselves into banks. However, various checks and balances have been built in to limit financial risk spreading from the other business activities of new bank promoters. Currently there are 26 public sector banks, 22 private sector banks and over 40 foreign banks.

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