Game changers in the banking sector
The Banking Laws (amendment) bill introduces competition in the sector in the way it is understood in a mature market. Though RBI has kept the right to decide which company will be allowed to bid for a 26 per cent shareholding in a bank through the fit and proper criterion, it will be soon under pressure to accept all competing challenges, irrespective of the parentage of the bidder. For instance, how can a regulator say it is satisfied that a bid for a minority stake in a bank mounted by company A will be allowed to go through and say no to B, without getting involved in every possible way with the management of a bank, its politics and exercising judgement on the corporate sector that will compromise its neutrality. The choice for the regulator will become one of either allowing every bid or none at all. Also, as foreign banks have got the clarity to become wholly owned subsidiary in India, the competition they will mount for the established players will be awesome instead of being restricted to the Mumbai-Delhi market.
A big chunk of that competition is the race to pick up Aadhaar bank accounts. These right now appear unattractive but
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