RBI to come up with new guidelines for new banking licenses: R Gopalan

03 Jun 2011 Evaluate

The wait for new banking licenses is likely to be over soon as the Reserve bank of India (RBI) forwarded its recommendations to finance ministry and RBI is also in consultation with a number of stakeholders. Last year central bank had floated a discussion paper on new banking licenses which proposed that the Non-Banking Financial Company and corporates should be allowed to promote bank. According to the Finance Ministry, financial inclusion is one of the vital elements in the new banking guidelines.

The Ministry of Finance, Department of Economic Affairs (DEA), Secretary R Gopalan said, “Reserve Bank of India is in consultation with the finance ministry. They are also in consultation with a number of stakeholders. They will come up with draft guidelines soon and put it in the public domain for consultation.”

DEA secretary also said there is also a need to amend the Banking Regulation Act, to make sure the RBI is in a position to obtain information from entities related to providing or getting a license. On the timeline issuance of the new banking licenses DEA secretary said, “It has been introduced in the parliament. The standing committee will go through it and give their findings. Then it will go back to the parliament for final approval.”

The finance minister in his budget speech for 2010-11 had announced that the central bank is considering giving some additional banking licenses to private companies and NBFCs in order to expand the geographical coverage of banks. Since then, the list of candidates seeking banking licenses has been increased in the last year. The RBI is in against of granting licenses to private corporate houses and has raised its concerns over intra-group lending by banks