LONDON Jan 29 Indian finance minister
Palaniappan Chidambaram said on Tuesday he saw no reason why
companies that fulfil all central bank criteria should be denied
banking licenses as part of plans to shake up the country's bank
The Reserve Bank of India is expected to issue final rules
on new banking licenses to private entities within a few weeks
but many including the International Monetary Fund oppose
allowing industrial houses to set up banks, fearing it could
lead to misuse of funds.
"The RBI has drawn up draft guidelines, guidelines say that
more licenses will be given to the private sector. .. the
governor told me he will give out guidelines in two weeks,"
Chidambaram told Reuters Television: "Whether any corporate or
any kind of corporate will be excluded I cannot say."
"But if the guidelines are made out and transparently spelt
out and if a corporate satisfies those guidelines, I don't see
any reason why a corporate should not be given a license."
The government believes that the opening the sector will
pave the way for the creation of some world-size banks and that
deep-pocketed corporates will be able to provide much-needed
capital for banks.
The central bank had issued a draft set of guidelines in
August 2011 barring entities with 10 percent or more income or
assets from real estate, construction and broking activities
from starting banks.
Chidambaram said checks would be in place to prevent misuse.
"There will be clear firewalls and red lines which cannot be
(Reporting by Sujata Rao and Carolyn Cohn; editing by Ron