RBI expected to announce guidelines for setting up new banks this week

RBI expected to announce guidelines for setting up new banks this weekThe final guidelines for setting up new banks can be announced by the Reserve Bank of India (RBI) before the end of this week, a senior source involved in the ongoing process revealed.

Parliament has already approved the Banking Laws (Amendment) Bill, allowing the central bank to invite applications for setting up new banks, and the central bank is now busy in finalizing the guidelines.

Requesting anonymity, the source with direct knowledge of the matter, said, "It could be out in the first week of the New Year."

Finance minister P Chidambaram got the Banking Laws (Amendment) Bill passed, with an aim to enable the Indian banking system to create some world-size banks through mergers and amalgamations. He stressed that pricing should not be discriminatory.

Mr. Chakrabarty also declared that the RBI would announce a new set of guidelines during the coming Ombudsman Conference in Mumbai to prevent discriminatory pricing.

The Ombudsman Conference, to be chaired by RBI Governor D Subbarao, will take place on January 4.

Meanwhile, analysts say that the RBI will have to re-evaluate its bond purchase programmes and cash reserve ratio cuts as liquidity is still a big issue for the bank. All through this year, banks borrowed nearly Rs 140,000 crore on an average per day from the central bank.