A tale of two mistakes

RBI admits its own mistake on KC Land but refuses to pardon Videocon's

It is a rarest of rare case when Reserve Bank of India (RBI) publicly acknowledges its mistake, even if committed inadvertently. Last Friday, a press statement from the central bank -- on the highly sensitive issue of new bank licences -- said, it has inadvertently left out an applicant's name from the list of companies that has applied for bank licence.

A list of 26 bank licence aspirants was released on July 1, which was the deadline for the application.

In the same press statement that was issued on last Friday, RBI also said Aurangabad-based Value Industries has withdrawn it application. Value Industries is a part of the Videocon Group, and its chief Venugopal Dhoot immediately denied that it has withdrawn from the race.

Sources indicate that there was some confusion within the group as the officials who were handling the licencing issue were under the impression that the group had also applied in the name of Videocon. They thought that RBI is considering that as the main application and hence decided to fax a letter to RBI requesting withdrawal of the application by Value Industries. Later, when the group officials found out that Videocon has not applied, they wrote again to the banking regulator requesting Value's application to be reconsidered.

The banking regulator, was of course, in no mood to entertain the request.

On the other hand, RBI admitted that Chandigarh-based K C Land & Finance Ltd's application was received at its Central Office, Mumbai on July 1, 2013 "but was inadvertently not included in the list of applicants for new bank licences in the private sector, and is now being included in the list."

Little known KC Land & Finance is into real estate and hospitality sector.  

Questions have been raised by prospective applicants on why RBI took almost three months to find out there was a mistake. At a time when the word "licence" has become a taboo, with the 2G spectrum licence and coal block allocation scams rocking the entire nation, such lapses by the banking regulator will definitely cast doubt over the bank licence process.