P Chidambaram won’t cap new bank licences

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New Delhi: Finance minister P. Chidambaram has said that there was no ceiling on the number of entities which can be permitted to operate a bank, giving hope to the 26 public and private sector companies that have applied for bank licences.The general perception is that just four or five entities would be given licences. Chidambaram said, “I don’t think there is a ceiling. I don’t think there is a number in mind. It all depends upon how many applicants are eligible applicants. The fact that somebody applies doesn’t mean he is an eligible applicant,” he said.
He said further said, “If there are very few eligible applicants, then the number of banks that will get licences will also be few. I don’t think that the governor (RBI’s D. Subbarao) has any ceiling in mind.”
The RBI on Monday had announced that 26 entities, including Tatas, Birlas, Reliance Capital, LIC and India Post had applied for bank licences. On increasing the cap in foreign direct investment in defence, telecom and multibrand retail Chidambaram said that by the third week of July the Union Cabinet would decide on raising FDI caps in these sectors.
He said “The DIPP is calling each ministry and asking for its views in writing. They have told me that they will bring a paper to the cabinet. Hopefully in the second week, it will be sent to and then we should be able to take a decision in the third week.”
Speaking on the manufacturing front the finance minister said that manufacturing is not picking up because demand is sluggish. Demand for cars, two-wheelers, white goods and consumer durables have been seeing sluggish or negative growth though consumer non-durables grew by over 12 per cent.
He said manufacturing capacity is there but sentiments must change for buying durable goods. “That is one part of manufacturing. The other part of manufacturing is the core sectors- steel, iron ore, coal, power, minerals where manufacturing must grow,” he said adding that we must produce more coal, iron ore, steel and aluminium. That will happen as the upturn takes place, he said.
He cited the example of coal where production has improved but iron ore which is caught in a number of litigations will hopefully clear with the Supreme Court hearing the case.
Admitting that in many other core industries projects are stalled he said this is why government has now identified the projects which are stalled and is trying to remove these bottlenecks and things will begin to move.
“I think work is at pace. A special cell has been constituted. The cabinet secretariat is looking at the projects that can be cleared in a few weeks,” he added.