This is with reference to the Reserve Bank of India's (RBI) decision to grant licences to payments banks. In the present situation, commercial banks, especially the public sector ones, are doing their best to cater to the banking needs of the common man. Banks are performing well in opening deposit accounts, issuance of debit cards and offering remittance services. They are soliciting deposits from small savers and offering this corpus of funds as loans to industry, which needs money to run its business. It is a matter of satisfaction that our banks have enough liquidity to meet loan requirements of industry and agriculture.
Payments banks will snatch away some precious liquidity from existing banks and offer services, which the latter are offering anyway. Keeping this in mind, according to the RBI's decision, business houses are being licensed to attract low-cost deposits from savers directly by permitting them to open payment banks. This favours industry, but not so much banks, which will lose their share of low-cost deposits. Giving licence to India Post is, however, welcome.
SJS Chatrath Chandigarh
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