RBI suggests banking sector overhaul | Business Standard

RBI suggests banking sector overhaul | Business Standard

ONLINE COMMENTS POSTED ON AUGUST 28, 2013:
M G WARRIER
In August 2010, BS had published my following comments, when RBI released the discussion paper on new bank licenses: “The discussion paper on new bank licences released by RBI may, in the coming days, bring to fore the problems and challenges faced by financial sector as the issues raised in the paper go much beyond the government’s intention to give a greater role for private sector in banking to promote financial inclusion and reduce government’s financial commitments for running banks. It is quite natural that as a regulatory body responsible for the health of the financial sector, RBI’s concerns go farther from just the net worth of the promoter or his professional capability to run a bank. RBI’s intention to regularize and ratify the parallel banks which can conform to regulatory norms and rehabilitate some RRBs which may have manpower and infrastructure in place but may be finding it difficult to perform for want of leadership as also the central bank’s desire to keep the business of banking trustworthy is evident from the issues raised in the discussion paper. The present scenario is partly the result of GOI and RBI keeping the banking reforms in the backburner after allowing some banks in the private sector. At this delayed hour at least, a total view of banking needs and institutional infrastructure for meeting them may have to be taken before implementing short term solutions. If this is not done corporates at the national level and small borrowers at the ground level will continue to bypass the banking system.” The present discussion paper justifies my views.

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