Process of issuing bank licences should be ongoing: FICCI survey

The process of issuing bank licenses to new players should be an ongoing process, according to a majority of the respondents in a survey conducted by FICCI on new bank licences.

The central bank so far seems to have consciously kept a gap of a decade between issuing new bank licences.

In the first wave, 10 banks, including ICICI Bank, HDFC Bank and Axis Bank, were licensed on the basis of guidelines issued in January 1993. After that two banking licenses – Kotak Mahindra Bank and Yes Bank – were issued only in 2003-04.

And now, in 2013, twenty-six entities, including the Tatas, Birlas and the Anil Ambani Group, have thrown their hat in the ring for a bank licence under the RBI’s new guidelines.

FICCI said: “59 per cent of the respondents felt that the process of issuing bank licences to new players should be an ongoing process. 30 per cent of the respondents felt that the timeline for reviewing a new bank application should be 6-12 months.”

A majority (69 per cent) of the respondents felt that corporate/ industrial houses should be given licences while the remaining (31 per cent) felt that they should not be allowed to operate as banks.

New banks can be gamechangers

The Survey notes that apart from improving financial inclusion in India, new banks can potentially be gamechangers in the following ways: one, they can bring in the new processes and technology and will play a significant role in driving competition.

The new banks will also encourage existing players to improve efficiency; two, new players with sound financial base will bring in the much needed capital that is required to support the credit needs of the economy and they will generate huge employment opportunities.