The brouhaha on licensing new banks is in full flow. The RBI has announced guidelines for applicants. In a few weeks we will know the response.
Objectively speaking, there’s no room for more banks. And our experience with the new generation private sector banks in the aftermath of liberalisation is nothing to rave about. Just three of them survive.
Some were bought out and one went bust forcing a merger with one of the much derided government banks. A high profile survivor got into such horrendous asset-liability mismatches (after much boasting of its ‘risk management’ skills) that it had to be rescued with liquidity support from the RBI and the very government banks it made fun of earlier.
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