The Bharatiya Janata Party (BJP) is likely to support the Reserve Bank of India’s final guidelines for award of new licences in the banking sector with some suggestions.

The party’s members in the Finance standing committee are likely to ask the Reserve Bank Governor D Subbarao to change certain criteria, which according to them are very subjective.

Subbarao is briefing the standing committee, headed by BJP veteran Yashwant Sinha, on the issue on Tuesday. The party wants the RBI to prepare a roadmap for implementing the guidelines.

Party treasurer and member of Rajya Sabha, Piyush Goyal, had demanded that the Centre should not discriminate against certain sectors of the economy. He had urged the Government and the RBI to look at all sectors with an open mind, while objecting to the provision in the draft guidelines that prohibit companies with 10 per cent stake in real estate from starting a bank.

“We are happy that the final guidelines do not have such restrictions. You cannot put restrictions artificially,” Goyal told Business Line. He said draft guidelines reminded the era of licence raj.

“The Government should rather concentrate on issues such as inter-connected lending by such corporates,” Goyal said and added that the guidelines should be foolproof enough to check malpractices in the future.

“I think we should follow the American model. There are enough examples internationally where bank licences are given once the ‘fit and proper’ criterion has met and if a company is eligible for a licence, it should get it. You cannot pick and choose between two eligible companies and give it to one because that raises the scare of extraneous considerations before allotment of these licences,” Goyal said.

Goyal is also a member of the finance standing committee.

The Left parties have already said that they are opposed to new bank licences for private players. The BJP’s support is likely to help the Government and the RBI to implement the guidelines at the earliest.

(This article was published on April 8, 2013)
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