It was recommended by the central bank panel last week that large corporate houses can either open commercial banks. They also have the choice of either converting their Non-Bank Finance Companies into the same. Since India’s 1969 policy, the government had taken over private sectors till 1980. The entry path for the big names like tata, bajaj, and Aditya Birla could be made easier with the proposed equity dilution norms.
The Compliance timelines would be relaxed, and bank promoters need to reduce their stake in 15 years to 26%. The NBFCs which have deposits above Rs.50,000 crore will be eligible for bank license by following certain guidelines.
They could turn into small financial banks if they gave a record of 3 years of transactions. It can ensure greater effectiveness in capital efficiency.The RBI has also made provisions for feedback till 15 January. There is a globally seen technological transformation of banking. Google and Apple are seen to be offering financial services online. India is also slowly moving towards such a change aided by its fintech players; this will also lead to the shaping up of the public sector banks.
