RBI to publish paper on India's banking structure, says Subbarao

The RBI will come out with a paper on the banking structure in the country discussing issues like consolidation even as it prepares to issue new bank licences after a decade.

It will also involve enforcement agencies and tax authorities before it issues new bank licences to corporate entities for which applications can be made till July 1.

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“My take on that will be told very clearly when the RBI comes out with the paper. It’s a paper about the banking structure for India. We are going to bring it out in the next one month where we will address these issues or at least define the issues for discussion,” RBI Governor D Subbarao told PTI in an interview.

He was replying to a question about Finance Minister P Chidambaram talking about consolidation of banks at a time when new bank licences are on the anvil.

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Subbarao said the Narasimham Committee on banking sector, which went into this issue, had said that India must have some large banks at the global level, competitive and comparable with global banks.

The panel also said the country must have some mid-sized banks and some small-sized banks which can penetrate more.

“We have discussed this issue and as we licence more banks we believe that it will add to the competitiveness of a number of banks,” he said.

The discussion paper, sources said, would also cover issues like need for investment banks, policy on presence of foreign banks, conversion of urban cooperative banks into commercial banks, and periodicity of licensing new banks, whether in blocks or on tap.

PTI