Batting for more liberalised bank licensing policy of RBI for greater financial inclusion in the country, former deputy governor of the apex bank KC Chakrabarty on Saturday said the size of the new banks would not matter as their efficiency would be the key.
“There is no question on that. RBI itself is saying that it should be liberalised. That is why they are saying that they will give new types of licences,” Chakrabarty told journalists on the sidelines of an ICC summit when asked whether the licensing policy should be liberalised for more financial inclusion.
Chakrabarty said banks were the most efficient financial intermediaries for financial inclusion drive in the country. The Reserve Bank had earlier said it would issue final guidelines on small and payments banks by November end. The central bank in April this year had granted “in-principle” approval to IDFC Limited and Bandhan Financial Services to set up full-fledged banks.
“Everybody is saying that more banking licences should be given, at least that realisation has come in the society. This not a debate now,” Chakrabarty said.
On whether the upcoming banks should be large or small to cater to the needs of the country’s banking industry, he said in the banking operation, efficiency was more important rather than size.
“All banks were small when they were created. When Bank of Baroda and Punjab National Bank were opened, they were small banks. All banks are born small, but they should continuously grow. The moment they stop growing, they will then have a problem. So, small and big is not a problem,” he added.