Parliamentary panel against corporates getting bank licences

NEW DELHI: A parliamentary panel today opposed the new bank licences to corporate houses and voiced concerns over the discretionary power vested with RBI for applying 'fit and proper' criteria for deciding on applications.

The Parliamentary Standing Committee on Finance, headed by former finance minister and BJP leader Yashwant Sinha, finalised its report on the new bank licences at its meeting here today.

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

The members felt 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, saying it is discriminatory as it gives RBI discretionary powers to accept or reject an application based certain undefined parameters like a 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, 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.