Apropos the editorial "Differentiating to include" (July 21), of the two new categories - payment banks and small banks - the former is likely to attract more players. Small banks may have few takers given the high risk-profile of that category. Small banks have already been operating in India (regional rural banks, co-operative banks and local area banks) but all of them have become avoidable baggage either to the promoters or sponsoring units. Some of them achieved the objective of financial inclusion to some extent, but the business model became non-viable. Financial inclusion as an asset category is full of risks and even the new small banks cannot de-risk their business model. Payment banks would, of course, be up for grabs. Had the Reserve Bank of India (RBI) announced small banks first, there would have been more applicants for this category. RBI has been focusing only on financial inclusion as an immediate objective, but what about the viability of the business model that goes with each category?
K V Rao Bangalore
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