The RBI should consider giving new bank licences on tap, C. Rangarajan, Chairman to the Prime Minister’s Economic Advisory Council, has suggested. This would mean a system wherein the Reserve Bank of India awards licenses throughout the year to those entities who fulfil specified criteria.
Currently, the RBI follows what is known as a ‘stop and go’ or a ‘block’ licensing policy for banks, where it periodically issues new banking licences. The RBI is in the process of selecting candidates from the corporate sector for the award of new licences. India Inc has been lobbying for an ‘on tap’ bank licence policy, something which the RBI has so far resisted. This appears to have got a powerful push with Rangarajan’s endorsement. He said India should consider a policy for ‘continuous authorisation’ of new bank licenses. He was speaking at a banking summit organised by Assocham on Monday.
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