“India is full of opportunities. The banking sector will undergo great change in the next two years. You are going to have a whole new set of institutions, payment banks, small finance banks, possibly a postal bank — a lot of new institutions, but the existing institutions are going to change tremendously,” he said. “Public sector banks are going to be a tremendous change agent going forward,” he said.
Last month, the RBI had issued a list of applicants for small finance banks and payment banks after finalising guidelines in November 2014.
“Many of your clients are never going to set foot in a bank. But there are many opportunities outside of IT and derivatives. A lot of banks will do work in the social sector because that is where clients are initially obtained and they rise as they do business with the banks,” he said. Rajan was addressing students at the 11th convocation ceremony at the National Institute of Banking Management (NIBM) at Pune .
Rajan also said the central bank was looking at allowing full capital account convertibility in a few years. “My hope is that we will get to full capital account convertibility in a short number of years,” he said. Full capital convertibility means a foreign investor can repatriate his money into his own local currency at will, which is not allowed in the country now.