Opposition parties, including the Bharatiya Janata Party (BJP) on Thursday raised concerns about the timing of the grant of new bank licences by Governor Raghuram Rajan-led Reserve Bank of India (RBI) even though the Election Commission gave its go-ahead for the big-bang announcement.
“We have been very clear all through that when the model code of conduct is in force, when General Elections are a month away, then what is the hurry by the RBI to issue new bank licences? It would have made more sense to wait for the new government,” said Ravi Shankar Prasad, senior BJP leader.
Speaking to The Indian Express, Prasad said if voted to power, the Bharatiya Janata Party would revisit the issue of new bank licences. “We will come with structured responses. While we are very clear there should be more competition in the banking sector, there also has to be safeguards to protect the financial and banking system,” he said. The RBI on Wednesday issued bank permits to two firms — IDFC Ltd and Bandhan Financial after taking approval from the poll panel. The prior clearance from the Election Commission was required because the Model Code of Conduct is in place ahead of the General Elections that bars the government from announcing any new proposal.
But the move was also questioned by senior CPI leader Gurudas Dasgupta who said, “It is not the right time to issue bank licences with the elections right around the corner. The timing is such that we can not even take it up. The Election Commission has also cleared the proposal.”
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Both Dasgupta and Prasad are members of the Parliamentary Standing Committee on Finance, which in its report on new bank licences had cautioned the RBI against giving such permits to industrial houses. “Excluding industrial houses from bank licences is the only positive aspect of the process. The Standing Committee too had opposed such a move,” he said.
However, RBI governor Raghuram Rajan had earlier this week said that granting of new bank licences was not a political process. “This is not in any way a political process. It is an economic and regulatory process and therefore seen as distant and different…we have to undertake what we have to undertake,” he had said.
Finance minister P Chidambaram too had echoed similar views and said the process of granting bank licences should not be interrupted. Rajan, he said, had Rajan had referred the proposal to the EC out of “abundant caution”. Earlier, former finance minister Yashwant Sinha too had opposed issue of bank licences by the RBI during the election period.
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