- In the early stages, licences were granted to private players to establish new banks differing in terms of technology, capitalisation from the existing one and be a model for the dominant public sector banks.
- Before these licences, private bank licences were awarded to Kotak Mahindra Bank and Yes Bank in 2004. But is difficult to judge their performances as only a handful have survived while others have been acquired by stronger private banks.
- Global Trust Bank, was taken over by the government-owned Oriental Bank of Commerce. CRB, a substandard non-banking finance company was given in-principle clearance to start a bank. These lessons have made RBI more conservative in their approach to grant licences.
- One method for success is financial inclusion besides technological advancement and a clean slate to begin with. The successful banks of 1990s and thereafter excelled because of good pedigree.
- Read at: http://www.thehindu.com/todays-paper/tp-business/two-new-banks-on-the-horizon/article5909569.ece
Exams Perspective:
- RBI
- Monetary Policy
- Non-Banking Finance Company (NBFC)
- Financial Inclusion