New bank licences: Risks outweigh benefits in current context

MUMBAI, JAN. 16: 

The risks, in the current context, may outweigh the benefits with regard to the Reserve Bank of India’s commercial bank licensing policy, according to the joint IMF-World Bank Financial Stability Assessment Programme (FSAP) for India.

The legal, operational, and regulatory framework for consolidated supervision of both bank-led groups and financial conglomerates is still missing some important elements, it said.

GAIN EXPERIENCE FIRST

“It would be prudent to first put in place (these important elements) and gain sufficient experience from implementing a comprehensive framework for this purpose before even considering whether to proceed with the entry of mixed groups and conglomerates (in the banking sector),” said the FSAP.

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