ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Plausible Vision, Flawed Approach of RBI

Banking Structure

Following the crisis of 2007, there is renewed focus the world over on banking structure. This encompasses a number of related matters: the size, scope and number of banks, consolidation and concentration, and the degree of competition.

Getting the structure right is about getting the balance right between efficiency and stability in banking while striving for greater inclusion. A misplaced focus on efficiency can bring on a banking crisis and associated economic turmoil. Focusing too much on stability can breed inefficiency, which could prove a drag on growth and lead to a crisis as well. Inclusion is a priority but, if not pursued efficiently, it will undermine stability and cannot be sustained.

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