Money & Banking

Ministry studying RBI draft norms for new bank licences

Our Bureau New Delhi | Updated on March 15, 2011

The Finance Ministry has received from the Reserve Bank of India a draft of the proposed guidelines on new banking licences.

The RBI is expected to make the guidelines public by the end of this month.

“We have received the draft guidelines. We are looking into it. The Government is yet to take a view on it,” said Mr Shashikant Sharma, Secretary, Financial Sector, on the sidelines of a FICCI-SaDhan microfinance conference in the Capital.

On whether the draft guidelines cover the aspect of allowing industrial houses to obtain banking licences, Mr Sharma said that this issue was addressed in the draft, but declined to elaborate on it.

He parried questions on what would be the capital requirement for new aspirants to the banking sector. Indications are that policymakers would settle for Rs 1,000 crore capital for those looking to enter the banking sector.

The RBI has already recommended changes to the Banking Regulation Act and indications are that the Government will in the current session of Parliament introduce the Banking laws Amendment Bill for this purpose.

The RBI Governor, Dr D. Subbarao, had recently indicated that financial inclusion plans would be a key criterion for granting banking licences.

The Finance Minister, Mr Pranab Mukherjee, had his recent Budget speech for 2011-12 announced that the RBI was planning to issue the guidelines for banking licences before the close of the financial year.

In his Budget speech for 2010-11, Mr Mukherjee had announced that RBI would consider giving some additional banking licences to private sector players. Following this, the RBI had in August 2010 brought out a discussion paper, inviting feedback from the public.

Meanwhile, Mr Sharma indicated that the insurance laws amendment Bill is unlikely to be taken up for passage in the current session of Parliament.

However, plans are afoot to introduce legislations on PFRDA, State Bank of India (subsidiary banks), Banking laws amendment Bill and Factoring Bill in this session, which is to end on March 25.

Published on March 15, 2011

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