Public sector lenders are not afraid of further opening of the banking sector, Chairman and Managing Director of the country?s second largest state- owned Punjab National Bank (PNB) K R Kamath said here today.
"We are not afraid (of further opening of the banking sector)...Best in the public sector banks is yet to come out," he said while referring to the move of the Reserve Bank of India (RBI) to grant banking licences to more entities.
While inaugurating the 5th National Conference organised by the Jaipuria Institute of Management (JIM) on changing role of the banking sector, Kamath said the public sector banks did well after the RBI in 1993 issued licences for opening of banks, currently known as new generation private sector banks.
As the Reserve Bank contemplates issuing more banking licences, he said, "PSU banks will further reform themselves to meet the growing aspirations of the customers who "want more (services) for less (charges)".
Entry of more players, Kamath added, "will enhance competition and will benefit the customers."
The RBI has already come out with a discussion paper, outlining various pros and cons for norms like minimum capital requirements for new banks and promoters contribution, caps on promoters shareholding and other shareholders, foreign shareholding.
Business houses and entities like Reliance Capital, IndiaBulls, Religare, IL&FS, IDFC, IFCI and Aditya Birla Financial Services are reported to be keen to enter the banking sector.
India presently has 27 public sector banks, seven new private sector banks, 15 old private sector banks, 31 foreign banks, 86 regional rural banks, 4 local area banks, 1721 urban cooperative banks, 31 state cooperative banks, and 371 district central co-operative banks.
Pointing out that banks have now become financial service providers, the PNB chief also raised the issue of dual regulation and conflict of interest which can become a problem in the days to come.
"While RBI regulates banking operations, IRDA (Insurance Regulatory and Development Authority) regulates insurance...Such a duality could lead to conflict of interest and other major problems," Kamath said, pointing out that PNB itself was into banking as well as life and non-life insurance segments.
Besides PNB, there are several state-owned banks, which have entered the insurance sector.
Earlier, the government had to intervene in the turf war over regulation of Unit Linked Insurance Products (ULIPs) between IRDA and market regulator Securities and Exchange Board of India.
