Corporate Affairs Minister Salman Khurshid today said the CCI can perhaps make mergers and acquisitions of banks easier and asserted that it is wrong to say the anti-monopoly watchdog will not understand the objectives of consolidation in the sector.
"I do not think there is any problem, people have assumed that the Competition Commission of India (CCI) will not understand the intricacies and the objectives of what bank consolidation is all about. Perhaps, the CCI will make consolidation easier," Khurshid said on whether the banking sector would be kept out of the ambit of the Competition Act.
The Reserve Bank has reportedly written to the Finance Ministry asking that the banking sector, including mergers and acquisitions of banks, should be kept out of the purview of the Competition Act, 2002.
Speaking at the Diamond Jubilee celebrations of the Press Trust of India here, Khurshid said the Ministry has got feelers from the banking sector that amalgamations should be kept out of the CCI's purview.
"Although we are studying all possibilities, it is not right to say that the CCI will not understand bank consolidations," he said.
Responding to Khurshid, ICICI Bank Chairman K V Kamath who was also present at the seminar said, "We will abide by the laws of the land."
The government, however, is yet to notify sections 5 and 6 of the CCI Act, which will empower the Commission to vet merger and acquisitions.
After notification of sections 5 and 6, all mergers which would increase the combined assets of the two entities to more than Rs 1,000 crore or raise the turnover to Rs 3,000 crore would require the CCI's nod.
The banking sector also enjoyed exemption from the regime of erstwhile Monopolies and Restrictive Trade Practices Act.
Section 54 and 55 of the Competition Act 2002, grants power to the central government to exempt certain sectors or enterprises from the competition watchdog's lens.
