A better banking system

MY LETTER ON THE SUBJECT MATTER OF NEW BANK LICENCES IN FINANCIAL EXPRESS OF TODAY (15TH APRIL 2014)


A better banking system


This refers to the news item “Bandhan Financial, IDFC win banking licences, India Post in the queue” (FE, April 3). Though the long wait for granting new bank licences has finally ended with RBI deciding to issue permits to two of the 25 applicants, yet some sections feel that the announcement at this juncture when elections are about to be held is one more effort by the current government to win some popular support from the masses. Here one may recall the words of former World Bank economist Percy Mistry who said that the political leadership still believes the Indian electorate comprises a bunch of babies that should be given jalebis at election time. In spite of every election which has shown that the electorate wants development and good governance, more than 90% of our leaders seem proud to remain economic illiterates. He had rightly expressed a fear that he did not see the prospect of political stability that would provide the kind of comfort that foreign and domestic investors will need and demand for the next few years. Answering to a specific question as to whether it makes any sense in giving new banking licences for bringing more people into banking fold, he had said that it did not. He also elaborated that the problem in India is not that we do not have a sufficient number of banks but that almost 70% of our banking system is state-owned, inefficient, non-inclusive … Hence, the necessary safeguards should be built by our policymakers to ensure that our banking system becomes not only vibrant but also remains healthier.
JS Broca ,
New Delhi


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