Finmin in discussions with RBI for new bank licenses

Last Updated: Friday, November 9, 2012 - 21:41

New Delhi: The Finance Ministry Friday said it is in talks with the Reserve Bank on the issue of new banking licences.

"So one way of tackling (funding constraint of infrastructure sector) is to increase the number of banks and we are looking at that prospect of new licence would be provided," Economic Affairs Secretary Arvind Mayaram said a function organised by IIFCL.

"We are in discussions with the Reserve Bank of India for new licences to be provided so that the canvass can be stretched as far as the banking finance is concerned," he said.

He admitted that Indian banks have done fairly well in providing the resource which has enabled the private sector to grow into the infrastructure sphere.

However, there are certain weaknesses in this model of dependence on banks, he said.

Meanwhile, Finance Ministry sources said some movement on new banking licences is likely to happen in this fiscal.

The RBI, in August, had released the draft guidelines on allowing industrial houses to promote banks.

As per the draft norms, private sector entities or groups owned and controlled by Indian promoters, with diversified ownership, sound credentials and integrity, and having successful track record of at least 10 years, would be eligible to promote banks.

Earlier this week, some Members of Parliament had expressed reservations at a meeting of Standing Committee over the RBI's proposal to grant banking licences to industrial houses arguing that it would not promote financial inclusion.

The draft norms on bank licences have pegged the minimum required capital for promoting bank at Rs 500 crore and restrict foreign shareholding at 49 percent for the first five years.


First Published: Friday, November 9, 2012 - 21:41
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