Friday, August 13, 2010

RBI's Discussion Paper on New Private Sector Banks in India

GOI announced in the Finance Minister's Budget Speech in February 2010 on its policy of allowing some more new private sector banks in India.  After working for nearly five months, RBI came out with its Discussion Paper on this policy.  It is a welcome move certainly. 

RBI being a cautious and professional regulator (unlike an iron curtain prior to reforms), is undertaking the exercise this time in a scientific manner. The 80+ page Discussion Paper deals with all facts and figures of banks in India and abroad. Having had a variety of experiences in last four decades with public, private and foreign banks in India, Two Nationalisations, Mergers of weak banks, Poverty Alleviation Programs, Debt write-offs, Computerisation, Deregulation of Interest rates, Loan Melas, Risk and Asset Liability Management and so on, RBI has now proposed that the capital of new banks would be Rs. 1,000 crores, that instead of individuals - corporates would be entertained, and so on.

Ultimately, we expect a healthy level playing field in the Indian Banking system with equal opportunities to all concerned. At the same time, issues like Financial Inclusion, regulating of MFIs and NBFCs, etc are to be kept in mind too. Indian banking system is now witnessing a highly competitive, productive and challenging scenario.  Basel II norms are in force now.  Capital Adequacy is being ensured by all the banks in India. It is a great feeling that whereas over 240 banks in USA closed down in the last eighteen months, no such threat or panic situation surfaced in the Indian scenario. Credit, of course, goes to the excellent Governance by RBI.

2 comments:

prashant said...

To me, the below point is the most important one.

quote
To contain the possibility of “holding out” if an industrial / business house comes under severe stress, industrial and business houses may not be allowed to use the brand name and logo of the Group.
unquote

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