The Reserve Bank of India is all set to issue licenses to big industrial houses to set up banks, subject to two criteria’s; one it gets the power to supersede boards of banks that are not being run properly and second that it gets the right to oversee the operations of the promoting company and any affiliates that will have business relationships with the bank.
Currently, RBI does not have the power to dismiss a bank board, but under section 45 of the Banking Regulation Act, 1949, it can force amalgamation or merger of a bank with another, and force a reconstruction of the board to protect the interests of depositors, shareholders and employees.
Applications of only those candidates that have no previous records with investigative agencies like Enforcement Directorate, the Central Bureau of Investigation or the Central Vigilance Commission, will be considered for the banking license.
Finance Minister, Mr Pranab Mukherjee outlined in his budget speech that the guidelines on new banking licences will be issued by the RBI by 31st March, he also added that no banking licences would be issued until the Act that governs banking is changed and the RBI gets the above mentioned powers.
Currently, RBI does not have the power to dismiss a bank board, but under section 45 of the Banking Regulation Act, 1949, it can force amalgamation or merger of a bank with another, and force a reconstruction of the board to protect the interests of depositors, shareholders and employees.
Applications of only those candidates that have no previous records with investigative agencies like Enforcement Directorate, the Central Bureau of Investigation or the Central Vigilance Commission, will be considered for the banking license.
Finance Minister, Mr Pranab Mukherjee outlined in his budget speech that the guidelines on new banking licences will be issued by the RBI by 31st March, he also added that no banking licences would be issued until the Act that governs banking is changed and the RBI gets the above mentioned powers.
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