New Banks coming....

Assocham calls for 50-100 new pvt banking licences

Press Trust of India / Mumbai October 08, 2010, 20:37 IST

Taking all stakeholders by surprise, industry body Assocham today suggested that the Reserve Bank of India (RBI) issue between 50-100 new private bank licences in the current round of allowing new entrants.

"At least 50-100 licences should be given so that an explosion of competitive spirit happens, like it did with the insurance sector," President of the industry body Swati Piramal told reporters after meeting RBI officials here.

It has been widely speculated that the central bank may issue six new licences to start with in the first round. The RBI had in August floated a discussion paper on issuing new licences and sought opinions till September 30.

Taking the process forward, it started meeting various stakeholders yesterday and the meet with industry bodies is a part of the same.

During yesterday's meet the Confederation of Indian Industry (CII), which is represented by a slew of executives from non-banking lenders, had said a lower capital (below Rs 1,000-crore) would result in relatively small banks, which could potentially lead to higher risk-taking and more volatile earnings.

Pitching for allowing industrial houses to be allowed into banking, Assocham also called for a longer period of ten-years for stake dilution by promoters.

"It takes around Rs 1,000-crore and time to build a business...Our shareholding should not suddenly come down. May be in 10 years we can (come down to the stipulated 10 per cent)," Piramal said.

RBI, led by Deputy Governor Usha Thorat, also met representatives of Ficci today but no reaction was available from the body immediately.

Representatives from consultancy firms like PricewaterhouseCoopers and a body of Microfinance institutions are expected to call on RBI officials later in the day.

Thanks to Business Standard....