FinMin expects RBI to issue licenses by FY 14 end

On allowing real estate, brokerage companies, the ministry says any sector can't be excluded

With the keenly-awaited final norms for new banking licences issued on Friday by the Reserve Bank of India (RBI), the finance ministry said it expected the central bank to issue these to the new entrants by the end of the next financial year (March 2014).

It also defended the guidelines allowing real estate and brokerage companies to apply, saying no sector should be excluded.

“There would be examination of applications (by RBI and a high powered committee). I think with all going well, with all clearances by the end of the financial year (2013-14), we will see some success,” Financial Services Secretary Rajiv Takru told reporters here. The last date for applying is July 1.

He said the guidelines aimed at ensuring only responsible people entered the banking space.

When asked if public sector entities had an edge over private corporate groups, the secretary said it was a “level playing field”. “I don’t think RBI is going to play any favourites and we have no intention of any favourites being played,” he said.  

On the issue of clearances of applicants from the income tax department, the Central Bureau of Investigation and the enforcement directorate, among others, Takru said these conditions were aimed at ensuring the safety of customer deposits.

In the final guidelines, RBI changed its earlier suggestion by not excluding brokerages or real estate companies from entering, in line with what the finance ministry had indicated.

Former financial services secretary D K Mittal told Business Standard there was a strong view on not excluding any sector. “If there is a good company in real estate, you can’t keep it out. We have put a firewall which is not there in any country, so they cannot misuse it,” he said.

He said the guidelines were very balanced and in line with the government’s recommendations. “We had lots of discussions and arguments. On some points, RBI managed to convince us; on some, we convinced RBI,” said Mittal, now the finance minister’s budget advisor.