......Addressing a function at the State Bank of Mysore, Chidambaram said the new banks should not try to become clones of existing banks. “We don’t want the seven of them to look like each other with different mastheads. We want each one of them to cater to the needs of a special group of customers. You will have competition, efficiency and progress only if people attempt different things and do things differently,” he added. Though the finance minister didn’t elaborate, the RBI had earlier talked about differentiated licensing on the lines of the US and Singapore..........
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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.
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