...... A set of new banks will strengthen and expand the industry and add to the resilience of the state-run banks, besides deepening the government bond market. Competition can bring down the bond yield too, benefiting the government, which is grappling with high fiscal deficit. More importantly, competition will benefit the consumers. Let many new banks come up, even if a few of them die................
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1 comment:
The way in which the issue is being approached by different stakeholders gives a feeling that ‘bank’ is a product which can be hoarded or sold at the whims of finance ministry or RBI guided by public opinion dominated by the will of those who can afford to invest the needed capital. This position has evolved over time, because of the manner in which new bank licenses to the so called ‘new generation’ private sector banks were issued. Perhaps, at that point of time, financial sector was yet to open up and what was done, by and large, met the requirements of the banking sector.
Present scenario calls for a more pragmatic approach and those who are responsible for policy formulation should come out with transparent norms, which, if complied, should enable any Indian applicant with the wherewithal and skill and other needed resources to make an application to start a bank. It should be left to the wisdom of the central bank to process and decide on each application based on merits including the national priorities and banking needs. Perhaps, time is opportune for considering more ‘specialised’ banks catering to needs of different geographical regions and sectors.
M G Warrier, Thiruvananthapuram
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