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Chidambaram hints new licenses may be given

Finance minister P Chidambaram said the Reserve Bank of India is likely to issue a few bank licences during the remaining term of the government, in spite of there being a model code of conduct prior to the general elections. He said the government and regulators are discharging their normal duties and RBI may issue a few licences, he said at a meeting of the CEOs of the public sector banks in New Delhi responding to a query whether the model code of conduct could prevent the RBI from releasing the list. The Bimal Jalan committee, which has gone into the applications for new bank licences, had submitted its report in February, suggesting entitites that can be issued new licenses. It is expected that RBI would now give in-principle approval to a few applicants. Chidambaram said there were misconceptions about what a government could or could not do during the time the code was in force. He clarified normal government functioning would not come to a halt. The suggestions discussed at the bank heads’ meeting included revision in regulations for the Pension Fund Regulatory and Development Authority (PFRDA) and the Insurance Regulatory and Development Authority (Irda) to enable pension funds and insurance funds to be invested in additional Tier-I capital, giving rights issue in equal proportion to minority shareholders (so that their stake was not diluted when the government infused capital) and allowing banks to issue shares to their employees.

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