Unions protest decision to grant new banking licences

The All India Bank Employees Association (AIBEA) has raised objection to the Reserve Bank of India (RBI)’s decision to grant banking licences to two more entities — the IDFC and Bandhan.

AIBEA said that on April 19 its officer bearers would meet in Punjab to decide the next course of action. C H Venkatachalam, general secretary of the association, said it was a matter of concern that despite protests, the Election Commission (EC) gave its go-ahead to the RBI with the process of granting new bank licences and immediately the RBI gave in-principle nod to two companies to start their own private banks.

On April 2, RBI granted licences to IDFC Ltd and Bandhan Financial Services.

RBI Governor Raghuram Rajan had stated that the central bank will follow an ‘on-tap’ policy, implying that more and more licences will be given to private players particularly to the corporate houses waiting in the wings.

“It is strange that even though the Standing Committee on Finance consisting of all major political parties has unanimously given its recommendations against the banking licenses at this juncture, the RBI is going ahead in their anxiety to appease the corporates. What our country needs strengthening of public sector Banks and not opening up banking sector to private players whose tract record is also not appreciable,” said Venkatachalam, expressing anger at the RBI decision.