Letter to BS: Licensing of more foreign banks won't help the ailing sector

Moreover, many existing foreign banks have ceased to lend in the retail sphere and have reduced their exposures in the country

This refers to “New solutions to India’s banking crisis” (June 6). While I agree with the writer’s contention of the problems being faced by the public sector banks (PSBs), the suggested solutions may not meet the requirements of the economy. Licensing of more foreign banks will lead to opening of their branches in metros and big cities and catering to select affluent clients and big industry. The removal of requirements of adhering to priority sector norms and opening 25 per cent branches in unbanked areas will reduce any incentive for these new entrant foreign banks to open branches and lend