Finance Minister asks RBI to issue the final guidelines for new banking licenses
But, RBI insists on amending the Banking Regulation Act before such a move.
What RBI wants?
- RBI wants that before it issues final guidelines, the overall Banking Laws (Amendment) Bill, 2011 should be passed by the Parliament.
- The Bill seeks to empower the RBI to supersede the boards of directors of banks for a period not exceeding six months, in the interest of depositors or for securing proper management of any banking company.
What Finance Minster (FM) says?
- The Act will indeed be amended, hopefully in the winter session or at most in the Budget session.
- As issuance of the first license would take six to eight months, RBI doesn’t need such powers immediately.
- By the time the license is issued and the bank comes into existence and begins to function, the Act would have been amended