New entrants in banking industry to operate all over India
By Vaibhav Aggarwal
Mar 22, 2010
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According to financial services secretary R Gopalan, the Finance Ministry has said that new players getting banking licenses should be operating pan- India but this should in no way affect the playing arena of the existent players.

"There must be a level playing field for the existing banks also. It (entry of new players) should not be a disadvantage to them. The guidelines will be framed in such a way that it will not be disadvantageous to the existing players," Mr. Gopalan said.

The Finance Minister, Mr. Pranab Mukherjee had said in the Union Budget 2010-11 that fresh banking licenses should be issued to private players and NBFCs.

Mr. Gopalan said that the Government has taken this step of allowing new entrants into the industry so as to allow healthy competition in the industry and also as a part of its financial inclusion drive. "There are any numbers of unbanked villages and the potential for banking in the country is huge," Mr. Gopalan said.

Earlier the RBI had said that new banks would cater to rural India only. The government had announced that it wanted banking licenses to be provided to NBFCs who have a strong rural presence so as to move ahead with RBIs objective of maximum financial inclusion in India.

But this idea did not seem apt. With more banks at a particular place, there will be more competition amongst he banks which will be beneficial to the customer. Thus the decision of who getting a bank license and who not needs to be taken with utmost care and all those who pass the test need to be given the same platform to play.

On the other hand, SBI Chairman, Mr. O. P. Bhatt has said that the RBI's decision of rate hike has come as a surprise to banks. "Let us wait to see what RBI does in the April policy review... there may be another rate hike then." He said there was sufficient liquidity in the banking system and SBI may raise lending rates after May '10.

Mr. Bhatt also said that the bank is targeting a credit growth of 20 % in the upcoming fiscal.


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