RBI governor Raghuram Rajan on Friday said the two applicants granted banking licences earlier this week ? IDFC and Bandhan Financial Services ? were the ones that the Jalan committee and RBI felt ?comfortable with? and the ones that had lost out would be better off applying for ?differentiated licences?.
?We went through the list of applicants and this was the set of applicants that the Jalan committee as well as the RBI felt comfortable with,? he said. ?But we have opened up the possibility that (other) applicants can apply once we put the licences on tap as well as we created differentiated licences. Now, some of the applicants will be better off applying for a differentiated licence rather than for the full licence,? he told reporters on the sidelines of the annual convocation ceremony of the National Institute of Bank Management ( NIBM).
Differentiated licences will be for services such as a payments or lending only.
A couple of days ago, RBI gave an in-principle approval to infrastructure financier IDFC and micro-lender Bandhan Financial Services to start new banks. The approvals will be valid for 18 months, during which the two companies will have to comply with rules stipulated by RBI, the central bank had said in a statement. The two firms were selected on the suggestion of a four-member committee headed by former RBI governor Bimal Jalan.
A total of 25 entities were in the race, including Anil Ambani-controlled Reliance Capital, Aditya Birla Financial Services Group and L&T Finance Holdings, an arm of engineering to IT conglomerate Larsen & Toubro.
The RBI originally received 27 applications in July 2013, but Tata Sons and Videocon Group withdrew from the race.
Stop looking for artificial fixes on bad loans: Guv
RBI governor Raghuram Rajan on Friday asked banks to stop looking for ?artificial fixes? in dealing with bad loans and make efforts to ?fix things up the right way?.
Postponing recognition is not forbearance, he said, referring to banks that had approached RBI to consider treating bad loans with forbearance and postpone recognising these as bad loans.
Rajan said the focus must be on treating performing assets. ?I think when we do that, we clean up our balance sheets; the markets will (then) be willing to provide finance to institutions that had these balance sheets and, thereby, create a space in financing. So, let?s not try to find artificial fixes. Let?s go about fixing it the right way,? he said.
?Because I am not telling our banker friends who are working very hard at this point to deal with some of these problems and put the banks back on track. I think the time will tell what distinguishes the men from the boys and women from the girls and the truly good bankers will figure out ways to put their balance sheets back on track, put their banks back on track.?
He said it was a shame that so many people in the country did not have access to banking. ?There has to be a way around this. We have to give people good savings products, We have to give people good investment products. Looking inwards, we have to look at what regulations make sense and what don?t make sense,? he said.
