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?.