Letters: On-tap bank licences
Letters: On-tap bank licences: We had to wait 65 long years after passing of the Banking Regulation Act for Raghuram Rajan to arrive and tell us some ingenuous solutions to handle some of the tricky problems faced by Indian banking sector...
On-tap bank licences
This refers to the report "RBI ushers in on-tap bank licence" (Business Standard, August 2). The initiative to issue licences to those who are serious about the business of banking and can mobilise resources and provide leadership to professionally manage new banks has not come a day earlier.
RBI has been struggling to reconcile the interests of multiple institutional systems, broadly coming under commercial banks, cooperative banks and NBFCs, all trespassing each other's operational jurisdictions and the competing claims for regulatory, supervisory and administrative controls from central and state governments and a variety of statutory bodies.
We had to wait 65 long years after passing of the Banking Regulation Act for Raghuram Rajan to arrive and tell us some ingenuous solutions to handle some of the tricky problems faced by Indian banking sector. He has opened many taps to ensure smooth and competitive functioning of the banking system and it will not be easy for RBI and government to take an easy diversion, as in the past.
Ideally, all institutions which were "outside" the definition of banks and were doing the business under some pretext, will have to transform themselves into banks or transfer their banking business to banks. Consolidation also need to be prioritised.
M G Warrier, Mumbai