No new banking licences without legal backing, says Subbarao

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Pune:

A day after Finance Minister P Chidambaram asked the Reserve Bank to speed up the process of issuing new bank licences, Governor D Subbarao today said it would be not possible without fulfilling the enabling conditions for the same.

"We have been preparing for launching this process (of issuing new bank licences) but all the ground work, all the enabling conditions for launching this work have to be fulfilled," he told reporters on the side-lines of a function here. Yesterday, Chidambaram had said he had asked RBI to finalise the guidelines for new bank licences and start accepting applications for the same pending passage of the
Banking Laws (Amendment) Bill.

"We have written to RBI recently urging them to proceed to finalise the guidelines and proceed to receive applications for new banking licences in anticipation of the amendment in the Banking Regulation Act," the Finance Minister had said. "We hope that RBI will pick up the thread and finalise
the guidelines and start receiving the application." The Minister had said that "the power or the authority" which RBI wants is already available in the other provisions of the law and with the central bank's own regulations and guidelines for new banking licences.

The last time RBI allowed new private banks was in 2002, prior to which it allowed new players in the mid-90s. The RBI issued the final guidelines in August 2011 for entry of new banks, including those floated by corporates, but is waiting for the necessary legal powers before it proceeds
further.

The bank licences were initially slated to be issued way back in 2008-09. The Governor was talking to reporters in Pune after inaugurating an RBI conference on 'Leveraging Cooperative
Advantage'.

Story first published on: November 17, 2012 11:15 (IST)

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