RBI has already come out with a discussion paper on the banking sector in India, on which the regulator has invited comments from stakeholders.
In order to expand the reach of banking, the Reserve Bank Deputy Governor K. C. Chakrabarty says, RBI is considering making the bank licensing process more frequent and allow free entry of banks as and when necessary. Excerpts :
We propose to carry forward these ideas and come up with a detailed road map of necessary reform and regulations for free entry and making the licensing process more frequent after we get comments from the stakeholders.
RBI is in the process of issuing new bank licences consistent with the highest standards of transparency and diligence.
RBI has already come out with a discussion paper on the banking sector in India, on which the regulator has invited comments from stakeholders. The document explores the possibility of a differentiated licence for small banks and wholesale banks, the possibility of continuous on-tap licensing and the possibility of converting large urban co-operative banks into commercial banks.
With a view to ensuring that the banking system grows in size to meet the needs of a modern economy and improve access to banking services, the RBI is considering giving some additional banking licences to private sector players subject to their meeting our eligibility criteria.
The regulator is encouraging foreign banks to adopt the wholly-owned subsidiary model to carry out business in the country. We have more than 44 foreign banks in the country and at least three of them are more than 100 years old … RBI will encourage qualifying foreign banks to move to a wholly-owned subsidiary structure that will enjoy near national treatment. The banking system is well capitalised. Profitability is reasonable, return on equity is reasonable, NPA is under control and it meets with all global standards of regulation for business.
Indian economy is facing challenges of high inflation, slow growth and investment, the current account deficit (CAD) is above sustainable levels and fiscal deficit high. It is the intent and objective of the Government to attract and promote foreign direct investment in order to supplement domestic capital, technology and skill for accelerated economic growth. (With PTI inputs)
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