Dec. 9: The Reserve Bank of India (RBI) will come out with the draft guidelines for new banking licenses by end of January 2011. The central banker has decided to put this discussion paper on new licenses on its website, governor Dr. D Subbarao said in Kolkata on Thursday. He was speaking after the central board meeting of RBI.
RBI will bring out draft guidelines after studying the feedback on the discussion paper. Several non banking finance firms and some corporate houses have expressed an interest in applying for a banking license, once the conditions are known.
“We have discussed issues like initial capitalisation, the way promoters’ stake would be diluted, whether corporate houses would be considered for licenses, whether NBFCs would be allowed to convert into banks and the business model. However, there was divided opinions on several of those issues,” Dr. Subbarao said.
“We have decided to put the discussion paper on new banking license on our website in a week to get feedback from general public. We will study the feedback before making the draft guidelines by January-end 2011,” Dr Subbarao elaborated.
The central board of the RBI also discussed issues related to micro finance institutions (MFIs). Dr Subbarao on Wednesday had said that besides high interest rates, lending practices by MFIs and their knack of giving loans to non-priority sectors were matter of concern for the RBI.
“Y. H. Malegam Committee on MFIs is looking into these aspects and would submit its report next month. However, we will convene a meeting of the bankers in next two weeks to get their opinion on what to do in the interim period before the Malegam Committee submits its report,” the RBI governor revealed.
On being asked about the ongoing bribes-for-loans investigation, he said that the RBI had studied the matter and would do further study. “However, all loans have been sanctioned according to established rules. We are still studying the matter and anything that needs to be disclosed in the public domain we will definitely do it,” Dr Subbarao quipped.
The RBI, which in the short term has fixed the target of inflation at 5.5 per cent by March-end, 2011, however, maintained that inflation management would be difficult specially when the global oil prices were increasing.