FM asks RBI to start issuing new licences
"Even if the RBI picks up the thread and resumes the process that was started about a year ago of finalising the guidelines and issuing the first licence, that is going to take six to eight months and the occasion to invoke these extraordinary powers will not come the next day," he said.
"The occasion to invoke these extraordinary powers will come only when that bank does something wrong. And that is not going to happen one day after the licence is granted.
"Therefore, by the time the occasion arises, the powers will be there in the Banking Regulation Act. So as stated by the then Finance Minister's Budget speech, we must take the process of finalising the guidelines and receiving applications for new bank licences as early as possible," Chidambaram said.
The RBI is seeking powers to supersede the board of an erring bank, to authorise acquisition of shares beyond 5 per cent in a bank holding company, and an exit policy in case of irregularities.
On November 15, Chidambaram said he had asked RBI to finalise the guidelines for new licences and start accepting applications for the same pending passage of the Banking Regulations Bill.
The last time the RBI allowed new private banks was in 2002 prior to which it allowed new players in 1991-92.
The RBI issued the final guidelines for new banks in August 2011, including those floated by corporates, but is waiting for the necessary legal powers
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