The Reserve Bank of India might soon come out with its final guidelines on new bank licences, said Punjab National Bank Chairman and Managing Director K. R. Kamath.

The entry of new banks into the system would encourage healthy competition, thereby benefiting customers, he said.

In August 2011 the central bank had issued draft guidelines, according to whichfirms with an exposure of 10 per cent or more to real estate and brokerage businesses by revenue or assets might not be eligible for applying for bank licences. The RBI had also fixed the minimum capital requirement for new banks at around Rs 500 crore.

“We expect the final guidelines to be out in the next couple of weeks or by next month. Entry of new banks will promote healthy competition,” Kamath, who is also the Chairman of Indian Banks’ Association, told newspersons on the sidelines of the 24{+t}{+h} Triennial Conference of the All-India Allahabad Bank Officers’ Association.

According to Kamath, credit growth would start picking up starting the first quarter of next fiscal. The asset or loan quality of banks would also start showing signs of improvement early next fiscal, he added.

“Credit growth has been sluggish so far but we should start seeing some improvement in credit demand early next fiscal,”

Asset quality should improve once the economy starts showing signs of improvement, he said.

shobha.roy@thehindu.co.in

(This article was published on February 10, 2013)
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