Raghuram Rajan, Governor, Reserve Bank of India, said he hopes that the window for new bank licences will open sooner for the specialised banks than for full-service banks.
“I would say we hope to open the window soon…first for differentiated (bank) licences like payment banks and then open the on-tap licences for universal banks,” he said at the post-policy press conference here.
On-tap licensing means interested entities can apply to the RBI for opening a bank at any point in time, as against the current regime where corporates rushed to apply when the window opened in February 2013 after 10 years.
“On-tap licensing will allow people to develop banking capabilities even with relatively small size of operations, which will (later on) allow them to go ahead and apply for full bank licences,” the Governor added.
The crucial aspect, according to Rajan, is that the business of banking in this country is a matter of trust and bank licensees have to win that trust.
“We want to ensure that those people who can build that trust get the opportunity to get the licence.”
The RBI is in the final stages of issuing banking licences to a few entities.
It had sought the Election Commission’s nod on going ahead with the licensing process as the model code of conduct for the upcoming elections is in place.
“The idea to take the Election Commission (EC) on board was to primarily shield the announcement from controversy, so that the new licensees do not get dragged into the political process which could happen quite easily,” Rajan said.
The RBI would be in a position to announce the bank licences fairly quickly after taking it to the committee of the central board, he added.
Later in the evening on Tuesday, the EC gave its nod to the RBI to go ahead and issue bank licenses.