Passing of Banking Laws Amendment Bill 2011 just the beginning
The Parliament has approved the Banking Laws Amendment Bill 2011 to allow the Reserve Bank of India (RBI) to issue new bank licences, but the success of setting up of new banks will depend on a lot more factors.
Experts are of the view that passing of the controversial Banking Laws Amendment Bill 2011 is only the beginning.
Narayanan Ramaswamy, partner at KPMG, said, "Amendment to the Banking Bill is just the beginning. A lot more factors, starting with entity structure, will determine the success of setting up new banks."
One big point of debate is that whether industrial houses should be given banking licence. Moreover, many believe that it is a misleading notion to say that new banks will fetch financial inclusion.
But, Union Finance Minister P Chidambaram claims that it would not help in achieving the financial inclusion goal by offering more banking facilities while also generating additional employment opportunities in the banking sector.
Mr. Chidambaram also says that passing of the Bill was necessary to enable India to create world size banks.
Of the eleven banking sector players who were given licences since 1994, just seven continue to exist today. Times Bank merged with HDFC Bank, GTB merged with OBC, Bank of Punjab merged with Centurion Bank that in turn merged with HDFC Bank.