Volume 1 Issue 12
A COUPLE of weeks ago, RBI granted in principle approval to eleven players to launch Payment banks. The list included who’s who of corporate biggies. The RBI also promised to roll out Small banks shortly. While Payment banks will primarily be vehicles of making electronic payment and fund transfer besides raising deposits, Small banks will offer complete banking services in a limited area of operation. Coupled with the Jan Dhan Yojana, these entities have the capacity to completely revolutionize the Indian banking sector. If we look at the overall tone and tenor of the latest discourse about banking sector, some broad themes emerge. Most prominent of these is the focus on the bottom of pyramid. Not only is there an urgent focus on bringing the large number of unbanked people in banking umbrella, but also there is a clear intent to use banking channel to push social benefits. This is a welcome sign because the earlier subsidy regime had completely lost credibility. Further, garnering money from the rural areas to help rural entrepreneurship is way more sensible idea than coaxing banks to lend to unprofitable ventures in the name of priority sector lending. This is a much realistic and better way to achieve financial inclusion. Therefore, there is a sense of hope and optimism as regards these banks.