The Reserve Bank of India is going to follow very stringent entry norms, for the new banks and the RBI is introducing the four tier structure. The RBI feels that it is very important to follow stringent rules, so that only the fully qualified banks enter into the banking industry. This move should improve the services of the banks and they would be able to offer quality services. The top tier banks would be with three to four established presence, both in domestic and abroad. In addition, there should be foreign branches of the new banks. The second tier branches would be the mid-sized banks, with wide economic reach.
The third tier would be dedicated to the banks with the old private sector banks. Finally, the fourth tier banks would be the banks, which are privately owned local banks and also the cooperative societies. Further, the RBI feels that the banks should work with a measured approach.