RBI is committed to freeing entry in banking
Key highlights of his speech are as follows:
* Deposits will not continue to be cheap, while the government cannot continue to pre-empt financing at the scale it has in the past if we are to have a modern entrepreneurial economy.
* Fiscal discipline will be central to sustainable growth going forward.
* Many of the projects being financed today, however, require sophisticated project
evaluation skills and careful design of the capital structure.
* In the past, PSBs had the best talent. But today, past hiring freezes have decimated their middle-management ranks, and private banks have also poached talented personnel from PSBs.
* The Reserve Bank of India is committed to freeing entry in banking.
* Will announce a more regular process of giving licenses
* Proposed Post Bank could start as a payment bank, making use of post office outlets to raise deposits and make payments.
* The priority sector obligation will probably be necessary for some more time in a developing country like ours
* Examining possibilities such as if one bank, efficient at rural lending, over-achieves priority sector obligations and then “sell” its excess to underachiever bank.
* RBI will come out with new relaxations on business correspondents shortly.
* We can increase competition in the banking sector, strengthening banks by reducing the burden of obligations on them.
* Freeing Public Sector Banks to Compete
* Privatization is not necessary to improve the competitiveness of the public sector. But a change in governance, management, and operational and compensation flexibility are almost surely needed
* Hopes banking sector will see a much more varied set of banking institutions
