The Reserve Bank of India (RBI) has set up a high-powered internal committee, headed by deputy governor Y V Reddy, to expeditiously process all applications from financial institutions intending to migrate into universal banks. The RBI has set an internal time frame to decide on all applications by November 15.
The finance ministry had held a meeting with the officials of RBI and term lending institutions, in September 2001, wherein it had asked them to submit their applications by the end of October.
It was also decided that the RBI will take a view on these applications within a fortnight of receipt.
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Subsequently, the RBI has set up an internal panel comprising senior executives of rural planning and credit department (RPCD), department of banking development and operations (DBOD), financial institutions cell and the legal cell.
Once the applications are submitted, this committee will evaluate the proposals on various aspects such as commitment to levels of priority sector lending, statutory liquidity ratio (SLR), and cash reserve ratio (CRR), as also the availability of the branch network of the aspiring universal banks.
While ICICI proposes to move the application tomorrow itself, subject to board approval, IDBI chairman P P Vora said that he would be ready with a plan by the month-end. IFCI is, however, likely to take its time to move the RBI on this issue.
Sources have said that ICICI is ready to take the plunge even if the RBI makes no concession on CRR, SLR and priority sector lending stipulations. Also the recent cut in CRR requirements to 5.5 from the earlier 7.5 per cent is expected to help ICICI in its transformation to a universal bank.