 "New bank licences in a few weeks after EC's nod: Raghuram Rajan")
The Reserve Bank of India (RBI) is expected to issue some new banking licences in the next few weeks after getting a go-ahead from the Election Commission (EC) as the model code of conduct for polls is in place.
“My sense is, if all goes well, we should be able to do it in a few weeks. We have to (seek) the formal approval from the EC that announcing the bank licences will be okay,” RBI Governor Raghuram Rajan told reporters after Finance Minister P Chidambaram addressed the central bank’s board meeting.
Rajan added that there was a view that the code of conduct would not come in the way of issuing bank licences as the process started last year, but still, it would be best if it was formally approved by the EC.
Earlier this week, Chidambaram had said the code of conduct would not be a deterrent for issuing the new bank licences as RBI was spearheading a process, which started a year ago.
When contacted, sources in the Election Commission said the matter is a routine one and will be cleared once it comes to the Commission.
Replying to a query on Friday, Chidambaram said he had not made any recommendation to RBI regarding bank licences. He said he had not seen the Jalan committee report, which scrutinised the applications.
As many as 25 entities, ranging from business houses to non-banking financial companies, have applied for bank licences. The list of applicants includes India Post, IFCI, Reliance Group, Aditya Birla group, Bajaj Finance, Muthoot Finance, Religare Enterprises and Shriram Capital, among others. “Once we complete the due diligence, we will pass on the recommendations to the committee of the central board of directors (comprising the governor and a deputy governor) and then a decision on issuing new bank licences will be taken,” Rajan added.
RBI had constituted the Jalan committee to examine fit-and-proper criteria, business plans, corporate governance practices, etc, of applicants. The committee submitted its report last week. The report has left out tainted entities or those being probed by investigative agencies from the banking licence race, sources said. It apparently strictly followed RBI’s norms, which defined the “fit and proper” criteria. In that case, companies whose names figure in the 2G telecom spectrum scam and the coal block allocation scam, or those involved in other investigations, may not be preferred for new licences.
ALSO READ: RBI fast-tracks bank licensing process
“My sense is, if all goes well, we should be able to do it in a few weeks. We have to (seek) the formal approval from the EC that announcing the bank licences will be okay,” RBI Governor Raghuram Rajan told reporters after Finance Minister P Chidambaram addressed the central bank’s board meeting.
Rajan added that there was a view that the code of conduct would not come in the way of issuing bank licences as the process started last year, but still, it would be best if it was formally approved by the EC.
Earlier this week, Chidambaram had said the code of conduct would not be a deterrent for issuing the new bank licences as RBI was spearheading a process, which started a year ago.
When contacted, sources in the Election Commission said the matter is a routine one and will be cleared once it comes to the Commission.
Replying to a query on Friday, Chidambaram said he had not made any recommendation to RBI regarding bank licences. He said he had not seen the Jalan committee report, which scrutinised the applications.
As many as 25 entities, ranging from business houses to non-banking financial companies, have applied for bank licences. The list of applicants includes India Post, IFCI, Reliance Group, Aditya Birla group, Bajaj Finance, Muthoot Finance, Religare Enterprises and Shriram Capital, among others. “Once we complete the due diligence, we will pass on the recommendations to the committee of the central board of directors (comprising the governor and a deputy governor) and then a decision on issuing new bank licences will be taken,” Rajan added.
RBI had constituted the Jalan committee to examine fit-and-proper criteria, business plans, corporate governance practices, etc, of applicants. The committee submitted its report last week. The report has left out tainted entities or those being probed by investigative agencies from the banking licence race, sources said. It apparently strictly followed RBI’s norms, which defined the “fit and proper” criteria. In that case, companies whose names figure in the 2G telecom spectrum scam and the coal block allocation scam, or those involved in other investigations, may not be preferred for new licences.
ALSO READ: RBI fast-tracks bank licensing process