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

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‘On-tap’ Bank Licences

Critically evaluating the draft guidelines for “on-tap” bank licences put up by the Reserve Bank of India, it is argued that India’s banking system is already sufficiently competitive, and there appear to be few who would be willing to enter the banking business. Entry of newer players, especially those with corporate backing, cannot be the priority at the moment. The priority over the next two or three years has to be the resolution of the non-performing assets problem and strengthening of the existing players.

As promised, the Reserve Bank of India (RBI) has come out with draft guidelines for “on-tap” bank licences. Earlier, the RBI gave out bank licences for universal banks in occasional bursts. There was one round of licensing following guidelines issued in 1993 when the RBI issued nine bank licences. Subsequent to fresh guidelines issued in 2001, another two bank licences were issued. More recently, following guidelines issued in 2013, the RBI issued licences for differentiated banks, that is, payment banks and small banks.

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