'Industry approves RBI conditions on new banks'

Says the move would help improve financial inclusion and generate jobs

A majority of Indian industry applauds the Reserve Bank's decision to allow new entrants in the banking sector, as it would help improve financial inclusion and generate jobs. Also, a sizeable chunk of industry representatives want the new entrants to be financially sound entities.

These are the findings of a survey by the Federation of Indian Chambers of Commerce and Industry (Ficci). The survey drew responses from existing banks, non-banking financial companies and corporate houses.

A big majority (88 per cent) gave a thumbs-up to RBI's condition that applicants be prepared to set up at least 25 per cent of branches in hitherto unbanked rural centres. Currently, only 35 per cent of the population has a formal bank account, as compared to an average of 41 per cent in other developing economies.

Around 69 per cent of the respondents felt corporate houses should be given licenses; the rest felt these should not be allowed to operate as banks.

Also, 58 per cent of the respondents felt new banks should start afresh; the rest believed new banks should acquire existing smaller banks and grow.

As many as 59 per cent wanted the process of issuing bank licences to new entrants to be an ongoing exercise. Around 30 per cent felt the time line for reviewing a new bank application should be between six and 12 months.