For infrastructure building Banks may get access to long-term bond
The Reserve Bank of India (RBI) once it revisits the existing guidelines will open up the banking space to more entrants. In the past the central bank has observed that it needs more differentiated players in the system and that licences would be available ‘on tap’; in keeping with this viewpoint, windows for accepting applications will be opened at intervals.
For infrastructure building in the country the RBI is also keen that intermediaries are able to access long-term funds. It might even consider exempting these liabilities from regulatory obligations such as Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) while allowing banks to access long-term bonds.
To have different kinds of intermediaries catering to diversified needs — in other words, a horses-for-courses policy- is the central bank’s longer-term objective. In this context, taking a closer look at the recommendations of the Nachiket Mor committee report, the central bank will crystallise its views in a while on how the suggestions can be taken forward.
The Usha Thorat committee report will also be studied on non-banking finance companies (NBFC). Earlier this month, Bandhan, a microfinance institution and IDFC, an infrastructure lender was awarded in principle banking licences by the RBI.
The central bank will consider the suggestions of the More committee for setting up of payments banks and wholesale banks; and will look how best this could be done. Using the returns to cover costs, payments banks are expected to invest the float that they have in government securities. With telecom companies as one of the partners, it is possible that these banks will operate as joint ventures.
Possibly with a capital of around R50 crore the central bank is also keen on having smaller banks operating in the system rather than the R500 crore required for universal banks currently. It believes these banks could play a valuable role.
Source: Financial Express
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