Letters: Make RBI whim-free

This refers to the report “New bank licences 8-9 months after enabling legislation” (November 17). If the finance ministry is confident that an amendment in the Banking Regulation Act is not necessary to give the powers sought by the Reserve Bank of India (RBI) for approving new banks, why is it not trying to convince the apex bank first? The finance minister’s statement that the ministry has “written” to RBI to start receiving applications is absurd. How can any genuine promoter apply without knowing the regulatory environment in which the new bank will function?

In October, RBI Governor D Subbarao had suggested that the powers to RBI should come through a legislative amendment. The powers given outside the provisions of the Act could contain stings, and could also be taken back in a different situation through the same process.

Statutory bodies should not be made subservient to the whims of ministry officials. RBI has faced problems on issues relating to banks earlier, owing to blurred clarity in powers and interpretation of law. Even today, a ten-year-old pension updation issue is shuttling between RBI and the finance ministry.

M G Warrier Mumbai

Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number