This refers to the edit “Banking on licences” (August 31). At present, we have a number of public and private sector banks, a huge list of co-operative banks (scheduled and non-scheduled) and several foreign banks with business and branches in India. The question is if it would be better to add more banks to this list. The Reserve Bank of India’s (RBI’s) intentions may be good – financial inclusion, competition and so on – but does the central bank have the machinery and the manpower to monitor the performance of various types of banks in the country. Definitely not. This is clear from the considerable number of scams, frauds and failures that were exposed in the banking sector in the last decade alone.
Another major concern will be monitoring the possible diversion of funds from the banking ventures of industrial houses to their other group businesses. No doubt, with the economic growth projected to remain strong – particularly in the services sector – the demand for banking services, especially retail banking, mortgages and investment services is expected to be high. But the current list of banks is certainly enough to take care of this demand. A better alternative is consolidation, mergers and acquisitions, takeovers and asset sales to have a strong and reliable banking system on which the common man can depend.
J S Broca, New Delhi
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