Regulations
RBI asked to finalise new bank licence guidelines: FM

Chidambaram said his ministry has urged the central bank to proceed to finalise the guidelines and proceed to receive applications for new banking licences in anticipation of the amendment in the banking regulation act

 
New Delhi: Finance Minister P Chidambaram on Thursday said he has asked the Reserve Bank of India (RBI) to finalise guidelines for new bank licences and start accepting applications for the same pending passage of the Banking Laws (Amendment) Bill, reports PTI.
 
"...we have written to the RBI recently urging them to proceed to finalise the guidelines and proceed to receive applications for new banking licences in anticipation of the amendment in the banking regulation act," he told reporters after reviewing the performance of public sector banks.
 
As per the RBI's draft norms released in August 2011, private sector entities or groups owned and controlled by Indian promoters, with diversified ownership, sound credentials and integrity, and having successful track record of at least 10 years, would be eligible to promote banks.
 
"We have written to the RBI and hope that the RBI will pick up the thread and finalise the guidelines and start receiving the application," Chidambaram said.
 
The Minister said the "power or the authority" which the RBI wants is already available in the other provisions of the law and with the central bank's own regulations and guidelines for new banking licenses.
 
"We are only formalising them by amending the banking regulation act. And I have assured the RBI that banking regulation act will indeed be amended, hopefully in the Winter Session (of Parliament), if not in the Winter Session then in the Budget Session," he added.
 
He further said if RBI proceeds to receive application and process them, even then the first banking licence is not likely to be issued in the next six or eight months.
 
"So by the time the licence is issued and the banks comes to existence and the banks begin to function, the banks regulation act would have been amended," the Minister said.
 
The draft norms have pegged the minimum required capital for promoting bank at Rs500 crore and restrict foreign shareholding at 49% for the first five years.
 

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COMMENTS

M G WARRIER

4 years ago

FM must be having reliable sources to confirm his feeling. If an amendment is not necessary to ‘give’ the powers sought by RBI(which include powers to supersede the board, to authorize the acquisition of shares beyond five per cent as well as powers for consolidated supervision and dispensation necessary to deal with companies that entered the banking sector), why not convince RBI about the position? During October, reports were there that FM had asked RBI officials whether the banking regulator could be given these powers without an amendment to the Banking Regulation Act. RBI Governor said in an interview on October 31 that RBI could not offer an informed response to this query from FM, because RBI believed that it needed those powers. North Block seems to have ignored the message in Dr Subbarao’s comment. The message was, RBI would be happy if the powers come through legislative amendment. The powers ‘given’ outside the Act provisions could be with stings and can also be taken back in a different situation through the same process(without legislative process). Statutory bodies like RBI should not be at the mercy of officials in ministries for the powers they are expected to exercise. RBI has burnt fingers on such issues earlier due to blurred clarity in communication.

ED to issue notices in Wal-Mart investments probe

ED will also ask the Commerce and Industry Ministry to furnish it with clearances that were given to the company to route the investment in 2010 in a subsidiary of Bharti ventures via a Mauritian arm

 
New Delhi: The Enforcement Directorate (ED) will soon issue notices to American retail giant Wal-Mart as part of its probe against the company's investment in an Indian company for alleged violations of forex laws, reports PTI.
 
"The agency has received a communication from the Reserve Bank of India (RBI) to probe the investments in this regard. Notices for want of documents with regard to financial investments and remittances will be issued by the Bangalore office of the agency," a source privy to the development said.
 
The agency, which has registered a case under the Foreign Exchange Management Act (FEMA), will also ask the Commerce and Industry Ministry to furnish it with clearances that were given to the company to route the investment in 2010 in a subsidiary of Bharti ventures via a Mauritian arm, the source said.
 
The investments are being conducted to probe allegations that Wal-Mart put money into the domestic multi-brand retail chain despite a ban on foreign direct investment in the sector.
 
Bharti Enterprises has, however, rejected the allegations that it had violated any rule in this regard. The company had said all the procedures were as per the "law of the land".
 
The Rs455.8 crore investment by Wal-Mart in Cedar Support Services Ltd, a subsidiary of Bharti Ventures, had come under attack from CPI Rajya Sabha member MP Achuthan, who wrote to Prime Minister Manmohan Singh earlier, saying it was "illegal" and flouted FDI rules.
 
The ED, a central investigative agency mandated to probe violations under the FEMA and Prevention of Money Laundering Act (PMLA), was asked by the Reserve Bank of India to check the alleged violations made by the US-based retail giant in an official communication earlier this month. .
 
In a letter dated 30th October, the Department of Industrial Policy and Promotion (DIPP) had asked that RBI may take action as appropriate as per provisions of FEMA rules and regulations.
 
The DIPP deals with all the FDI related matters.
 
"...there is a need to examine/investigate as to whether illegal investments have been made by Wal-Mart/CEDAR in FDI prohibited sectors. Accordingly, the matter is being referred to ED for further investigation and appropriate action, if necessary, in consultation with the government in accordance with the provisions of FEMA upon noticing violations if any," a source said.
 
In a letter to the Prime Minister, Achuthan, who is also a member of the Standing Committee of Parliament on IT, earlier this year had alleged that "the entire FDI has been diverted and illegally invested by Cedar in its 100% subsidiary Bharti Retail Ltd, which is carrying out multi-brand retail operations."
 

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Balasaheb Thackeray off life support system, security in Mumbai beefed up

No medical bulletin on the ailing 86-year-old leader's condition has been issued as yet, but one of the doctors attending on him said Thackeray was still being administered oxygen

 
Mumbai: Shiv Sena supremo Balasaheb Thackeray, whose condition turned critical last night, is showing signs of improvement and has been taken off the life support system, party spokesman Sanjay Raut said on Thursday, reports PTI.
 
"Yesterday definitely there was some problem. Balasaheb is stable and responding to treatment and off life support system. Yesterday (Wednesday) there was the need for him to be on life support system but today it is not," Raut, a Rajya Sabha MP, said.
 
No medical bulletin on the ailing 86-year-old leader's condition has been issued as yet, but one of the doctors attending on him said Thackeray was still being administered oxygen.
 
"He is being given oxygen and his condition is still not good," the doctor, who did not want to be identified, told PTI.
 
Meanwhile, security outside Thackeray's 'Matoshree' bungalow in suburban Bandra has been stepped up following Wednesday's incidents in which Shiv Sainiks had damaged some media vehicles and equipment.
 
Large contingents of Mumbai police and Rapid Action Force have been stationed and the area has been heavily barricaded.
 
Chief Minister Prithviraj Chavan has been continuously monitoring law and order situation in the state in view of Thackeray's condition.
 
"Last night, Chavan held a high-level meeting with the chief secretary and top police officers. Since this morning, he is in constant touch with family members of the Sena chief," official sources said.
 
Large number of shops and business establishments in Sena strongholds like Dadar and Parel were closed as anxious party workers converged at 'Matoshree' to inquire about their leader's health.
 
Politicians, film personalities and captains of industry made a beeline for 'Matoshree' as a mark of solidarity with the Thackeray family.
 
Union Minister Sharad Pawar, BJP chief Nitin Gadkari, party's deputy leader in the Lok Sabha Gopinath Munde, Congress general secretary Digvijay Singh, actors Salman Khan and Sanjay Dutt, filmmakers Madhur Bhandarkar and Ashok Pandit and industrialists Rahul Bajaj and Venugopal Dhoot visited 'Matoshree' to inquire about Thackeray's condition.
 

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