Companies which have applied for bank licences have to now contend with the information that government investigative agencies will be sending about them to the Reserve Bank of India.
The RBI has sent out a letter to all investigative arms of the Government of India including the Enforcement Directorate, the Department of Revenue Intelligence, the Central Economic Intelligence Bureau, the Central Bureau of Investigation and market regulator Securities and Exchange Board of India (Sebi) asking for information about the applicants.
Several industrial groups have made a pitch for the bank licences. This includes the Aditya Birla Group, Reliance-ADAG, Bajaj Group, Larsen & Toubro and others in a list of 26.
In almost identical language, the letters from RBI refer to the bank licensing exercise in which Mint Street has laid stress on the “fit and proper” status of the applicants.
The letter has asked the agencies to provide details of the status of investigations, if any they have filed against any of the promoters or other members of the concerned groups. So while the CBI will have to give information that Aditya Birla Group chief Kumar Mangalam Birla has been named in an FIR filed by CBI in the allocation of Talabira-II coal block, it is, however, not clear if this will be a reason for the RBI to stall the application from the group.
An independent committee under former RBI Governor Bimal Jalan has been set up by the current Governor to vet the applications.
Some of the investigating agencies confirmed they have received such a communication from the RBI. But none of them were willing to share details of the information they are sharing with Mint Street.
The data will be in addition to that which RBI maintains from the banking sector about the financial status of the groups.
The reason for RBI to ask for the information is clear, explained an official. It can’t suo motu take a call on whether a group is eligible or not on the basis of media reports. It also cannot ask for information on selective cases.
Instead a blanket call for all information about each group from all government agencies is legally necessary for RBI to take a position on the eligibility of the applicants. The information will be part of the analysis the RBI committee will make to decide if giving a bank license to a business group will create a moral hazard.