7 new bank licences coming, says FM | Business Standard
7 new bank licences coming, says FM | Business Standard
Comments published on October 8, 2013:
Online comments published in Business Standard on October 7, 2013:
Comments published on October 8, 2013:
M G WARRIER
Today(October 8), Business Standard has reported that by 'seven'
what FM meant was 'several' and therefore the paper has corrected the
story to that extent(only, I suppose!). My earlier comments stand
corrected to the extent BS has amended its earlier report. New banks,
AADHAAR, NPS,....all have one thing in common. Decisions are first taken
and implemented...and afterwards, authorities concerned or the 'people'
are asked to fall in line or comply.Online comments published in Business Standard on October 7, 2013:
M G WARRIER
The announcement about the norms that wil be followed in selecting
the winners from the 26 candidates for commencing banking business in
the private sector makes things easy for the Jalan Committee and finally
for the RBI Governor Dr Raghuram Rajan.
Now, there will be 7 new banks, each with some unique features to avoid
the look-alike syndrome, with a mandate to attempt to do different
things and ‘do them differently and each following a different path. We
cannot beg for more clarity. Much earlier, by declaring the take off of
All Women’s Bank in public sector, FM has already shown how deadlines
can be fixed and institutional structure can be defined, if there is a
will.
Now, it is for the Jalan Committee to express their views on the future
intitutional framework in the banking sector, based on the Committee’s
perceptions on the material on 26 applicants furnished to it and for RBI
to select the 7 from those eligible candidates which conform to the
FM’s prescriptions.
Even if RBI is willing to go half way together, the clear indication
from the FM is that the walk is going to be on parallel paths.
I am tempted to remember my following views published in Business
Standard when RBI released the discussion paper on new bank licences in
2010. Copied below:
"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."
M G Warrier, Mumbai
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