Thursday, November 13, 2014


                                                    DO WE REQUIRE MORE BANKS ?.

             We understand Reserve Bank of India shortly  will invite applications for
             setting up of small finance & payment banks. The proposed bank will be
             catering to the low income households and small businesses.

             The Reserve Bank Governor Mr.Raghuram Rajan, wish to deepen the
              financial inclusion and this is a step towards that direction.Already, the 
             banking sector is crowded with State Bank and its subsidiaries,20 Public
             sector banks,foreign banks,Private banks (both Old & New) and 
             Cooperative Banks(both Scheduled & Un Scheduled).Added to this there
             are Cooperative Societies operating which are catering to some  sectors.
             Further, there are NBFC's, Development Financial Institutions like SIDBI,
             TFCI, IFCI,NABARD etc. In this crowded financial environment,do we 
             require some more more banks which we may call  by any name?. 
             The Post offices  along with State Bank group and the Public sector 
             banks have deep rural penetration which will deliver the desired results.
             The government started Bharatiya Mahila Bank last year  for women
             empowerment which should achieve the objectives of financing the 
             needs of women entrepreneurs both (small & Medium).RBI has 
             already given new bank licences to IDFC & Bandhan to start banks. 
             We donot know when the banks will start operation?.

             Hence, RBI must rethink on this idea of starting small finance & 
             Payment banks and instead reorganise,reorient and energise the 
             existing financial system to deliver the desired results.Earlier, the 
             government was thinking of consolidating the banking system by 
             merging banks so that the country will have few banks with large 
             capital & funding capabilities.But presently,the new government 
             is thinking of smaller banks to cater to the large population of 
             this country. Will the smaller banks be viable is the moot question?.




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