The government and the Reserve Bank of India (RBI) have geared up to finalise the norms on new banking licences. In a meeting with the banking regulator, Finance Minister P Chidambaram has assured that necessary amendments would be made in the banking Act.
“We have discussed this with RBI, and the central bank has agreed to take the process forward. I have assured RBI that we will do our best to get the amendment Bill passed in the winter session of Parliament,” said Chidambaram. The banking regulator had put out the draft norms on new banking licences in August 2011. A year later, RBI released the highlights of comments and feedback received on the draft norms.
Chidambaram said inflation was a concern and the real answer lied in increasing the supply. The hike in diesel prices would lead to a spurt in inflation in the immediate term, but it would cool down, going forward, he said. Today the government told RBI what it intends to do in future, the minister added.
After taking charge as the finance minister, this was Chidambaram’s first visit to the financial capital of the country. Apart from RBI officials, he also met top officials of the Securities and Exchange Board of India, the Association of Mutual Funds in India and the stock exchanges.
Market players have urged the finance minister to take more measures to address the financial challenges faced by the economy and ensure that the country returns to high growth path. Chidambaram assured them there would be more reforms.
On raising the foreign direct investment (FDI) limit in insurance, Chidambaram said the decision was taken so that the Indian partners were not burdened with additional capital infusion.
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“Public sector banks that have promoted some insurance companies need capital for their own capitalisation. How can they provide additional capital for their joint venture insurance companies?” said Chidambaram.
He said hiking FDI limit was the only way to raise capital for the insurance industry.
On Shome report
Chidambaram said the Shome panel report would be made public in the next few days. “I hope once we find the way forward, all pending disputes as well as anticpated disputes can be resolved.”
On disinvestment target
“I approach my task with a high degree of confidence. My approach would be to meet the target,” the minister said.