Final norms for universal banking licences on-tap this fiscal: RBI

Final guidelines for giving universal banking licence on-tap will be issued in the current fiscal, said R Gandhi, Deputy Governor, Reserve Bank of India.

“We are working towards issuing guidelines for (licensing of) full-service banks on tap. I cannot give you a timeline, but it will be in this financial year,” Gandhi said on the sidelines of a banking conclave organised by industry body FICCI and the Indian Banks’ Association (IBA).

Earlier, the RBI had issued draft guidelines for payments and small banks and is now in the process of finalising the norms for the same. “Now the public comments (on small and payments banks) have been received and we are factoring them in. Soon we will come out with final guidelines on these two,” Gandhi said.

Further, in the wake of rising frauds and corporate governance issues in public sector banks, the central bank has also recommended certain reform suggestions to the Government.

Based on the recommendations of various committees, including that of PJ Nayak, “we have made certain suggestions to the Government, such as segregation of the chairman and managing director posts and a separate committee for appointment of directors on the board of PSU banks, and they are taking the final decision,” Gandhi said. On recent reports about the Government looking to pare its stake in public sector banks to under 51 per cent following recommendations to this effect by the PJ Nayak Committee (set up to review governance of boards of banks in India), Gandhi said the Government has to take a view on how much they want to invest in these banks.

With regard to the liquidity coverage ratio (LCR) norms, which were announced by the RBI in June this year, he said the banks are currently in compliance and will be able to achieve the target set by RBI.

The RBI had said the LCR will be introduced in a phased manner, starting with a minimum requirement of 60 per cent from January 1, 2015, and reaching 100 per cent on January 1, 2019.

The objective of the LCR is to promote the short-term resilience of the liquidity risk profile of banks.

It does this by ensuring that banks have adequate stock of unencumbered high-quality liquid assets that can be converted easily and immediately in private markets into cash.