ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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New Banks: Don't Say 'Yes' If You Want to Say 'No'

The Reserve Bank of India has published its draft guidelines for new entrants to the banking sector. It would have been advisable for the RBI to spell out the principal objective in licensing new banks. Is the principal objective greater competition or is it financial inclusion? If it is competition, then it would be alright to subject the new banks to the same branch licensing norms as the existing ones; if it is inclusion then they must be told to focus to a greater extent on unbanked centres. Unfortunately, the RBI has not thought it necessary to make the case for new entrants.

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