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Rahul Gandhi cautions RBI private banking norms

New Delhi, Sep 29 () : Banking licenses for corporates have raised many concerns by the parliamentary standing committee headed by ex-Finance Minister Yashwant Sinha and had Rahul Gandhi as one of the members who did not raise any dissent note on the report.

The report came at the time when RBI is going through the applications and plans to send the shortlisted ones to Bimal Jalan panel. The parliamentary committee also wanted RBI to increase the paid-up capital from Rs 500 crore to Rs 1000 crore. It also was not in favour of vesting discretionary powers with RBI since it could be misused in the background of many scams.

The power of RBI to reject or accept applications using the powers was one area that the committee said was open to misuse. 26 applications with big names like Tata are with RBI.

At this stage, nothing much can be done to change RBI guidelines. The only option is to give a mandate to RBI on certain provisions by the Parliament. The IMF had cautioned the government in opening the bank sector to corporates and many economies have kept away industrial houses from public banking.

RBI says EU and UK have allowed the private banking with controls on the promoters shareholding and voting rights that need sanction from the regulator.

Members wanted the fit and proper clause which RBI can use to be explained. In the Indian banking sector, there only 12 private banks which have come up in two phases and taking 20 years.

In 1993, the government allowed private banks and ten banks got the nod. In later stages, YES Bank and Kotak Mahindra Bank got permission. By December, the banks should get the permission. 25% of the operations of new bank should be in areas which do not have a banking system. The industrial houses should not have any stakes in the banks run by them or have a loan or credit facility from these entities.

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