Rejecting criticism that the Government was looking to favour large corporate houses for issuing new bank licences, Finance Minister P. Chidambaram said that only “fit and proper” persons conforming to the RBI guidelines would get such licences.
“RBI is the licensing authority. The Government has no role to play in granting bank licences. Let there be no misunderstanding. The Government has no bias in favour or against anyone getting a banking licence, provided fit and proper conditions are met,” he told the Rajya Sabha on Thursday.
He was replying to the discussion on the Banking Laws (amendment) Bill 2011, which was later passed by the Upper House.
Chidambaram said new bank licences were not intended for large corporates alone, but also for eligible public sector entities looking to enter the sector.
“Fit and proper persons alone will get the licence”, he said.
The Banking Laws (amendment) Bill seeks to give additional supervisory powers to the RBI, including the power to supersede Boards of Banking Companies.
Powers to RBI
Chidambaram also maintained that the Government had no intention to look for a new regulator for the industry alongside RBI.
“I agree that there are some problems in giving more powers to RBI. But I think RBI is best placed to continue being the regulator for banks at this stage”, he said.
Voting right
Parliament later passed the bank debt recovery law, which would bring multi-State co-operative societies under the ambit of the SARFAESI law.
The Banking Bill passed on Thursday would pave the way for RBI to gradually hike voting right cap of shareholders of private sector banks from the current level of 10 per cent to 26 per cent. The cap in public sector banks will be hiked to 10 per cent from 1 per cent now.