Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Politics / Policy/  No decision on bank licences yet as EC postpones meeting
BackBack

No decision on bank licences yet as EC postpones meeting

Finance minister says there was no need for RBI to refer issue of new licences to Election Commission

A total of 25 companies have applied for licences and RBI is finalizing the names of entities that will be granted a banking license by the regulator. Photo: Pradeep Gaur/MintPremium
A total of 25 companies have applied for licences and RBI is finalizing the names of entities that will be granted a banking license by the regulator. Photo: Pradeep Gaur/Mint

New Delhi: The suspense over new bank licences continued with the Election Commission (EC) postponing its meeting scheduled on Monday to decide whether issuing the licenses ahead of the national election would violate the model code of conduct.

Finance minister P. Chidambaram said there was no need for the Reserve Bank of India (RBI) to refer the issue of bank licences to the Election Commission.

In a press briefing at the Congress party headquarters in New Delhi, Chidambaram said the process of issuing the bank licenses was not new and the RBI governor was only playing it safe.

“RBI governor Raghuram Rajan had explained that they had referred to the Election Commission only out of abundant caution. This process had started almost two-and-a-half years ago. The process of inviting, screening, scrutinizing and selecting candidates for grant of bank license is an RBI-driven process and the government has no role at all," he said. “I think the process of granting bank licenses should continue uninterruptedly."

A total of 25 companies have applied for licences and RBI is finalizing the names of entities that will be granted a banking license by the regulator. Bank license applicants include Reliance Capital Ltd, Bajaj Finserv Ltd, IFCI Ltd, the Aditya Birla Financial Services Group and L&T Finance Holdings Ltd.

Two Election Commission officials confirmed the proposed meeting on bank licences did not take place on Monday. “The meeting did not happen today because the concerned officials were not available," a senior Election Commission official said, adding that the meeting may happen within the next few days.

The Election Commission had sought some clarifications from the central bank on granting of new licences. Election commissioner H.S. Bramha had said last week that the commission had received the central bank’s response on the queries.

According to the model code of conduct, which came into effect on 5 March, the government cannot make announcements that can influence voters. Elections to the 16th Lok Sabha are to be held from 7 April to 12 May.

Last week, the Election Commission asked the government to defer the gas price hike to be implemented from 1 April. The Union government had asked for permission to double the gas price from the current $4.2 per million British thermal unit (mBtu) to nearly $8.4 per mmBtu.

“RBI should be able to take a final call on bank licences given its autonomous nature. But given the sensitivity of the current environment, it’s natural that the central bank wants to be cautious," said Robin Roy, associate director, financial services, PricewaterhouseCoopers.

“As it is, all the aspirants have their own businesses and can afford to wait for two-three months more for a license. The additional few months may also give them more clarity on the new government and the impact of its policies on the economy," he said.

PTI contributed to this story.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 31 Mar 2014, 11:48 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App