.........Although the RBI has not officially said it is against corporates getting banking licence, a major factor that has come in the way could be the stipulation that RBI will give weightage to “sound credentials and integrity” of the applicants. The RBI had earlier said that promoters and promoter groups with diversified ownership, sound credentials and integrity that have a successful track record for at least 10 years in running their businesses should be eligible to promote banks. The catch, however, is that the RBI’s decision will also be guided by feedback from other regulators and agencies like Income Tax Department, CBI and Enforcement Directorate........
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1 comment:
I wish this represents the real thinking in RBI. In the first place, there was no urgent need to consider additional banks. There is nothing that cannot be achieved through the existing banks in India, if they could be appropriately reconstituted, guided and regulated. Time is opportune (but for the political instability)for revisiting the Narasimham Committee(Financial Sector Reforms) recommendations on reorganisation of banks.As far as reforming the banking infrastructure, it has been a half-hearted approach all along. It will be good if RBI is able to persuade GOi to resist the temptation to issue a few banking licences to some corporates without transparency in norms. Private banks have not helped much in increasing outreach or helping traditional priority sectors. Bulk deposits, outsourcing business outlets and bypassing priority sector lending targets by deposits in funds like RIDF(NABARD) or refinancing NBFCs are all on the increase. A review of approach is most appropriate.
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