Governor of the Reserve Bank of India (RBI) Raghuram Rajan hinted that in the next two years, the apex bank might issue licenses for setting up of payment banks, small finance banks and possibly a postal bank. Rajan who was speaking at the 11th convocation of the National Institute of Bank Management (NIBM) in Pune also said the existing public sector banks would under go changes.
“The banking sector in the country is full of opportunities and in the next two years we will see a number of changes. We are going to have a whole set of institutions, payment banks, small finance banks and possibly a postal bank. The public sector banks will so undergo tremendous change,” he said. The derivatives market and IT used in banking and by banking correspondents he said will also see a lot of change.
On February 4, the RBI had issued lists of applicants for small finance banks and payment banks post finalizing of the guidelines of such banks in November 2014. The apex bank has received 72 applications for small finance bank while 34 institutions have approached the bank for license of payment bank. Back in April 2014, the bank had issued licenses to IDFC and Bandhan. This was the first time such licenses were issued after a decade.
Speaking about the banking sector, Raghuram Rajan said that banks have started working in the social sector which was important. Making a strong pitch for the Swach Bharat Campaign of the prime minister Rajan extoled students to take up cleaning their surrounding once a week which he said will have a lasting campaign.
Dr Arvind Subramaniam chief economic advisor to the government who was the chief guest of the convocation talked about India being a bright spot in world economy. “The Indian growth rate is more than the Chinese growth rate at this moment,” he said. The Indian economy he said was precocious in nature as it tried to grow with its disadvantages rather than using its advantages. “Skilled man power is not easily available in the country, yet it is trying to grow using it,” he said. The effects of growth he pointed out have far reaching effect and can help bring about social changes.
Citing research carried out recently, he said that economic prosperity has helped bridge social verticals . “Such changes in India are happening rapidly and faster than it took for such changes to take place in Europe,” he said. India he said was one of the few fast growing countries which has a democratic set up. “In the last 2-3 electoral cycles bad performance has been penalized in the polls which is a very good sign,” he said.