Reserve Bank of India (RBI) Governor D Subbarao recently discussed the final guidelines on new bank licenses with the Parliamentary Standing Committee on Finance.
The guidelines were issued by the central bank recently to allow corporate houses and public sector entities with “sound credentials and a minimum track record of 10 years” to start banks.
During his presentation before the panel, Subbarao said the central bank had not received any application thus far. Companies can submit applications till July 1, according to the guidelines. He said applications were expected before the deadline.
The governor ruled out the possibility of auctioning of bank licences as the sector works on certain principles and guidelines.
He also explained to the members that strict measures have been taken to verify the applications so that only eligible applicants are allowed to start banks.
Some members of the panel, including its Chairman and BJP leader Yashwant Sinha, however, expressed concern at the move.
Sinha stressed on the need to exercise more caution in the context of the global situation. He said even countries such as the US have not allowed corporate players to enter the banking sector.
According to media reports, some members have told the RBI Governor that the guidelines could open an avenue for corruption.
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