Govt, RBI to take call on licences to real estate firms, brokerages soon: Anand Sinha
The Reserve Bank of India and the government will reach a ?mutual position? on whether to consider all companies, including real estate firms and brokerages, for new bank licences, said deputy governor Anand Sinha.
?When there is a consultation, obviously we have to take into account the other side. We will come towards a mutual position and then issue the final guidelines,? Sinha told reporters on the sidelines of an event on Friday. Final guidelines will be issued ?very soon? as consultations with the finance ministry is in final stages, he added. The government has reportedly asked RBI to consider even real estate companies while issuing bank licences.
RBI had reservations in considering real estate firms for setting up banks citing past experience where instances of self-dealing (favouring group companies) were observed.
In the draft guidelines released in August 2011, RBI had said companies with an exposure of 10% or more to real estate and brokerage businesses by revenue or assets cannot seek permits to enter the banking sector, thereby, making most realtors and brokerages ineligible to apply.
?The basic issue is the possibility of self-dealing,? the deputy governor said. Last month, finance minister P Chidambaram had said the final guidelines for licences will be issued in two weeks. This would be first time in a decade that RBI would issue new licences. The last licenses were issued in 2003 when YES Bank and Kotak Mahindra Bank were formed.
The first of the bank licences to private sector was issued in 1993 when nine banks were formed, including HDFC Bank, IDBI Bank and ICICI Bank ? predominantly development finance companies.
International Monetary Fund has warned RBI about issuing bank licences to even big corporates and Nobel Laureate Joseph Stiglitz recently said that bank licences to big corporate houses give rise to conflict of interest.
