Release of final guidelines on new banking licenses delayed
By Neelima Shankar
Jan 25, 2013
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The banking regulator, Reserve Bank of India, has hinted that for it to come out with the final norms on new banking licenses may take a while. Earlier, it was expected that RBI will announce the final norms on new banking licenses by the end of January. Those aspiring to enter the banking sector are keenly awaiting the release of final guidelines on new banking licenses, since the announcement of draft guidelines on the issue about one year ago.

The process seems to be delayed because of two issues - the finance ministry's proposal that real estate and brokerage firms should be allowed to open banks and the suggestion by International Monetary Fund that business houses should not be permitted into the banking space. These two comments seem to have brought the whole process of preparing the final guidelines on issuance of new banking licenses at a halt.

Reportedly, the report by IMF on the matter said, "International experience has supported the prudent policy position of disallowing industrial houses from promoting and owning banks," in its report titled, ‘Financial system stability assessment of India'.

Further, the comments made by noted advisors and policy makers have compelled the central bank to revisit its views on permitting business groups enter the banking sector.

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