Banks: Licensing for competition

Following the Election Commission’s nod, the Reserve Bank of India (RBI) has set the ball rolling on new banking licences by granting ‘in principle’ approval to two applicants — IDFC and Bandhan Financial Services. But what is really refreshing is the RBI’s overall approach to the licensing issue, which is novel. Unlike in the past, which saw 10 licences being awarded in 1993 and another three in 2003, Governor Raghuram Rajan has declared that the Central bank would migrate to a system where licences are handed out on a regular basis — ‘on tap’.

Read Full Story>>