With the Parliament having approved the Banking Laws Amendment Bill 2011, the work on issuing new bank licenses is expected to pick up pace with the formation of a RBI and finance ministry committee that will look into all the aspects of this move.
No date on the committee announcement, but sources say that it will be at least a three-member committee if not more. At this stage, it will basically be a Reserve Bank of India (RBI) and the finance ministry. In some ways one could call it a coordination committee. Deputy Governor of the RBI, the secretary of the department of economic affairs, Arvind Mayaram and the financial services secretary Mr. DK Mittal to be there.
Essentially, once the RBI makes up its full and final view, considers it at the board level the governor takes a final call on the matter This committee will essentially in some ways be the processing committee or the implementation committee. To put in the final clear guidelines in place, set in a framework of the processing of the applications, look at the timeframes during which these applications could be processed, perhaps even eventually go onto vet for basic eligibility the applicants that come in.
In some ways, a sort of standing committee of key officials from the RBI and the finance ministry to start this process and remember that this is not a process that happens often. The last time the process happened was many years back. Therefore, in some ways, the committee will have to fine tune and balance between the criteria and the requirements that the RBI sets and the government side will continue to push ahead with its policy objective of getting in more private banks because that is the essential point of view that the government is keen to push through.
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