Bank Liberal licensing key -for investment banking-RBI
A new dawn for Indian financial services is on the horizon as the regulator signalled its intention to grant bank licences on tap, special licences for investment banking and lower government holding in state-run banks to enable them to raise private capital than being at the mercy of a fiscally-strained state.
A liberal licensing practice will stimulate competition and usher in the next round of reforms in the banking sector though rules should be stringent and capital high to weed away non-serious aspirants, the Reserve Bank of India said.
"There is a case for reviewing the current 'Stop and Go' licensing policy and consider adopting a 'continuous authorisation' policy, as continuous authorisation keeps the competitive pressure on the existing banks and also does not strain the banking system as the 'block' licensing may do," said the paper titled "Banking Structure in India - The Way Forward.''
The paper has suggested consolidation for banks to gain economies of scale but warned that this should not be a forced process. It has called for a measured approach as small local banks play an important role in the supply of credit to small enterprises and agriculture services in unbanked and under-banked regions in the country.
Bank Liberal licensing key special licences for investment banking: RBI
A liberal licensing practice will stimulate competition and usher in the next round of reforms in the banking sector though rules should be stringent and capital high to weed away non-serious aspirants, the Reserve Bank of India said.
"There is a case for reviewing the current 'Stop and Go' licensing policy and consider adopting a 'continuous authorisation' policy, as continuous authorisation keeps the competitive pressure on the existing banks and also does not strain the banking system as the 'block' licensing may do," said the paper titled "Banking Structure in India - The Way Forward.''
The paper has suggested consolidation for banks to gain economies of scale but warned that this should not be a forced process. It has called for a measured approach as small local banks play an important role in the supply of credit to small enterprises and agriculture services in unbanked and under-banked regions in the country.
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