More banks up and running according to it, will expand the credit available to industry from the financial sector as the headroom available for the existing banks to offer more to sectors like infra is over. It certainly does not expect the new banks to take more than the minimum time to open their door for business, once the regulations are out.
But the RBI would still want to be cautious. It has won from the government far more powers to monitor the boardrooms of banks through the Banking Laws (amendment) bill in the winter session of Parliament, but still sees no reason to drop its guard on not permitting industrial groups, those with real estate or stock broking exposure to queue up as prospective licensees. This effectively means only a rare business house will qualify except with Everest like ring fencing of its other and banking interests. And, it has got the IMF to endorse this position too.
With no new banks on the turf it leaves just two other entities to expand their role
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