In a note to the Reserve Bank of India (RBI), Assocham said the central bank may consider giving out new bank licences in a staggered manner to few players in a specific time frame given the uncertainties or volatilities associated with current business environment.
The note pointed out that the granting of banking license could be a process, and not an event. The industry body wants the RBI to give licenses to entities fulfilling stringent benchmarks, with the maximum limit of 10-12 licenses initially. However, it said, the cutoff date for acceptance of applications must be in place for eligibility.
The chamber asked the RBI to consider giving licenses to well-run large NBFCs if they fulfill other conditions.
As part of the application, entities must be asked to provide details of assets and liabilities of promoters and put up on their websites, the chamber said.
RBI must conduct a complete evaluation on the viability and sustainability of inclusion model while selecting new entrants.
In order to create a level playing field, new banks need regulatory forbearance, Assocham opined.
In order to ensure that the economic viability does not suffer, the RBI must relax the requirements of 25 per cent branches in rural areas, 40 per cent advances to priority sector in the initial stages.
This is an area which needs extensive discussions so as to isolate any bias and unhealthy issues, it said.
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