Financial sector analysts have termed new banking guidelines as “a balanced and pragmatic approach” on the RBI’s part, as it allows a broader set of entities in the banking sector, besides ensuring maximum prudential norms to avoid any systemic risks.
“The final guidelines show the regulator’s practical approach, as it lays down fit and proper conditions for prospective entrants, and shows that the RBI is not pre-judged against anyone, as it has chosen to give everybody a chance,” India Ratings’ Senior Director and Head of Financial Institutions Ananda Bhowmik told PTI.
“While the guidelines have now allowed a broader set of entities to enter the banking space, there are sufficient checks and balances to ensure that new banks follow prudential norms and gradually move into mainstream banking with minimal systemic risk to the sector,” Care Rating said in a note.
Last Friday, the RBI finally issued guidelines for new bank licences, after three years of preparations. The new set of licences comes after over a decade, as previous licences were issued in 2001-02 when two new banks, namely Kotak Mahindra and Yes Bank got licences.
Following this, a host of entities such as Tatas, Birlas, Mahindras, Bajajs, L&T Finance, Anil Ambani Group, besides brokerages and NBFCs such as Religare, Srei Finance, Shriram Finance, IILF, Indiabulls, as well as state-run entities such as India Post, Power Finance Corp, IFCI and LIC Housing Finance among others, are likely to apply for banking licences.
The RBI has set July 1 as the last date for putting up applications.