Existing banking licence policy may be reviewed

This topic was also included in the Raghuram Rajan Committee Report and financial sector reforms as well, where he said that smaller banks do not have an impact when they fail and hence smaller banks should be encouraged.

The government also plans to look at financial inclusion parameters according to the size of the bank and hence the finance minister is likely to chair a meeting in this matter. Raghuram Rajan is all-set to takes over as the chief economic advisor tomorrow.

So, key recommendations from that report will also be considered in the review of this policy, also there will be review of the key feedback that has been received by the RBI.

So for instance FDI has been recommended at 74%, whereas it currently stands at 49% and increase in the minimum shareholding has been proposed at Rs 1,000 crore instead of the Rs 500 crore currently.

So, these norms will also be reviewed by the government and then the RBI will finally have to take a decision. So banking licenses also will see some delay.