FM expects RBI to speed up process of new bank licences

FM expects RBI to speed up process of new bank licences New Delhi: Finance Minister P Chidambaram Thursday expressed the hope that Reserve Bank would expeditiously formulate guidelines for setting up new banks and start inviting applications for licences.

"I would expect that the Reserve Bank finalises the guidelines as early as possible and then begins to invite applications and then continues the process," he told reporters soon after Rajya Sabha approved the banking laws amendment bill.

The Banking Laws (Amendment) Bill, 2012, which was earlier approved by the Lok Sabha, has paved the way for corporate houses to enter the banking sector, a key reform legislation pending for long.

"There is a need for more banks and I hope that the Reserve Bank will act with speed in the matter," Chidambaram added.

RBI had already issued draft guidelines in this regard and had assured the government that it would initiate the process of issuing new bank licences once the banking law amendment bill is passed by Parliament.

Chidambaram further said that a "fit and proper" entity can get the bank licence.

"Government has no bias in favour of or against anyone. A fit and proper person can get a licence and we have left it to the RBI to frame guidelines. And it is for the RBI to ultimately decide who will get a licence," the Minister said.

He was responding to a question on concerns expressed by certain corporate houses that some entities might be left out from the process.

On the reforms in insurance and pension sectors, Chidambaram expressed the hope that related bills would be taken up in the Budget session.

"I have told the two leaders of Opposition that once the banking bill is passed, I will get back to them for another round of discussion on insurance bill. There is only clause on which there is some difference of opinion," he said.

The Standing Committee which scrutinised the insurance bill has suggested that FDI limit in the sector should be retained at 26 percent, a cap which the government wants to hike to 49 percent.

The Finance Minister further said that he was confident that there would be an understanding on the two bills before the start of the Budget Session.

"Once the insurance bill is agreed upon, the pension bill follows insurance bill. So, lets look forward to beginning of the next Session with insurance bill and pension bill, but I will meet the two leaders Opposition in the intervening period," Chidambaram added.

The Cabinet had earlier given its go ahead to raising FDI cap in insurance as well as pension sector to 49 percent.

PTI