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The RBI today said only a few applicants will get the licence to start a bank. “Not all eligible applicants may get the licence,” said Reserve Bank of India Governor D. Subbarao. However, he added that the apex bank had not yet decided on the number of licences to be issued. “We do not want to get ourselves locked with any specific numbers right now,” he said.
Twenty-six corporate houses, including conglomerates such as the Tatas, Reliance, Aditya Birla, Bajaj and Shriram, have applied for a licence. Addressing newspersons after the RBI’s board meeting here, Subbarao said it will take three-four months to evaluate the applications. Then, the applications would be screened by an external committee that will submit a report to the RBI. “The final decision will be taken only after that,” he said.
Seeking a balance
On Finance Minister P. Chidambaram’s recent statement on the central bank’s role in job generation and industrial growth, Subbarao said the RBI is conscious of this role and also in ensuring financial stability. “We are doing our best to balance both,” he said.
On why many banks had not reduced lending rates, he said that when the RBI calibrates the short-term interest rate, it expects banks to respond by calibrating their lending rates. Some banks have responded; some are reluctant to pass on the benefit. “The monetary policy transmission is not as agile as it should be,” he observed.
No interest on CRR
Subbarao ruled out any plans to pay interest on the cash reserve ratio (CRR). The decision to raise or lower the CRR is taken on the basis of the liquidity situation. On rupee volatility, he said the RBI is doing its best to manage the fluctuation by deploying all the instruments available with it.
He also asserted that the growing non-performing assets of banks were a serious concern. Between December 2012 and March 2013 there was a decline in NPAs, “but we are not sure whether the trend will continue in the following quarters”. Banks, he said, are adequately capitalised to absorb any possible shocks from NPAs and the RBI is doing all that is required to keep NPAs and restructured loan portfolios under check.
Fraudulent schemes
He also pointed out that the central bank “has initiated an exploratory study” to understand income and expenditure patterns in rural areas and how people there fall prey to many fraudulent schemes. The RBI would then take corrective measures. However, he said neither the RBI nor the State government concerned have an idea as to how these unlawful entities come up and operate.
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