......Questioning what they called the “subjective nature” of the RBI’s final guidelines, many members reportedly told the RBI Governor that the guidelines could open an avenue for corruption. Sources in the panel told Business Line, on conditions of anonymity, that the members feared the guidelines would result in corruption and urged the RBI to drop the move. Though some MPs supported the RBI’s plan, they argued that the final guidelines will not encourage any one to start a bank.......
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Though the concerns expressed by the Parliamentary Standing Committee on Finance would appear normal in the present confused situation, they raise issues much deeper than whether or not applications for the new bank licenses should be received now or later or who should start a new bank in the private sector.
The way in which the issue is handled gives a feeling that ‘bank’ is a product which can be hoarded or sold guided by public opinion dominated by the will of those who can afford to invest the needed capital. This position has evolved over time, because of the manner in which new bank licenses were issued to the so called ‘new generation’ private sector banks. Perhaps, at that point of time, financial sector was not mature or was yet to open up and what was done, by and large, met the requirements of the banking sector.
Present scenario calls for a more pragmatic approach and those who are responsible for policy formulation should come out with transparent norms, which, if complied, should enable any Indian applicant with the wherewithal and skill and other needed resources to make an application to start a bank. It should be left to the wisdom of the central bank to process and decide on each application based on merits including the national priorities and banking needs.
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