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Reserve Bank of India Governor D. Subbarao will appear before the Parliamentary Standing Committee on Finance on Tuesday. He is likely to inform the panel about the final guidelines for award of new licences in the banking sector.
According to the new guidelines, issued by the RBI in February, corporate houses and public sector entities with “sound credentials and a minimum track record of 10 years” can start banks in the country.
The standing committee, headed by Bharatiya Janata Party leader Yashwant Sinha, has been tracking the issue since the RBI issued the draft guidelines.
Opposition
Sources in the panel said it would prepare a report on the subject after taking the views of the RBI and the Finance Ministry.
The Left parties have already opposed the move. “Banks run by big business houses will increase the scope for large-scale financial malpractices. The recent scams involving big business highlight the danger of financial swindles in such banks that will deprive the people who deposit in such banks of their hard-earned savings,” the CPI(M) had said in a statement.
In 2011, the panel had informally discussed the issue when certain members, cutting across political lines, had expressed doubts about RBI’s move.
Several corporate bodies have already evinced interest in starting new banks.
A panel member said that the entry of companies might lead to outflow of money from public sector banks and wanted the RBI to put in place stipulations on the nature of foreign direct investment in these banks and regulate FDI inflow into such banks.
Doubts have also been raised by some MPs that the move may jeopardise the process of nationalising banks initiated in 1969.
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