....The RBI has had enough time to mull over the guidelines and should be in position to issue the final guidelines before the Budget of February 2013, and the actual process of receiving applications could start from April 1, 2013. By April 1, 2013, the RBI should set up a High Powered Bank Licencing Screening Committee. Ideally, the Screening Committee should be a Panel of former Governors who would bring to the Table rich experience of dealing with an ordeal by fire. Such a Screening Committee would be better able to handle the political economy stresses and strains.......
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2 comments:
Would any purpose be served by having former Governors in the screening Committee if the Committee are, in the final analysis,prepared to surrender their judgement when there is political pressure for giving licences to some favoured parties? It may be better to spare them the humiliation of being overruled in a clever manner. I am not being cynical in saying this as all of us know as to what happens to the list of names recommended by the Selection Committee, headed by the Governor, to posts of EDs/CMDs of Public sector banks.
The pressure from industrial houses to hasten issue of new bank licenses and the urgency for UPA II to decide on who would be getting such licenses are understandable. Last three years or so, preoccupation with this issue has adversely affected the structural reforms the financial sector has been waiting for since the Narasimham Committee days. Super-imposing a ‘High Powered Bank Licensing Screening Committee’ will further weaken the RBI’s autonomy and reduce the options before the central bank. Once PM and those who are already holding public offices (Dr Rangarajan and Dr Y V Reddy) are excluded, there are not many Ex-Governors available for the onerous task, in the first place. Balance of convenience lies in trusting the In-house expertise of the central bank supported by expert advice that could be sought when necessary from outside. Statutory bodies like RBI should not be made to work like students under supervision or guidance from consultants.
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