Parliamentary panel against corporates getting bank licences: report

A Parliamentary panel has opposed new bank licences to corporate houses and voiced concerns over the discretionary power vested with the Reserve Bank of India (RBI) for applying 'fit and proper' criteria for deciding on applications.

The Parliamentary Standing Committee on Finance, headed by former Finance Minister Yashwant Sinha, finalised its report on the new bank licences at its meeting in Delhi on Friday.

According to sources, most of the members opposed the bank licences going to corporate houses and the same concerns have been reflected in the report which would be submitted to Lok Sabha Speaker Meira Kumar soon.

The members were said to have noted that since there is no such practice to give bank licences to corporate houses anywhere in the world, India should not be an exception.

The members also objected the 'fit and proper' criteria by the RBI, saying it is discriminatory as it gives discretionary powers to the apex bank to accept or reject an application based certain undefined parameters like scrutiny by the agencies like CBI, ED or income tax department.

The members insisted that the guidelines issued in 2001, should be the basis for issuing new bank licences.    

The panel also expressed concerns that the "corporate wave" may harm the interest of banking sector in the country.      

As per the guidelines for grant of new bank licences, the apex bank, RBI, can reject or accept an application on the basis of fit and proper criteria.

The members want that there should  be clarity on the issue and there should be ambiguity with regard to the applicability of the fit and proper criteria.

As many as 26 applications had been received for bank licences on the close on July 1, 2013.