New licences: Banks oppose regulatory arbitrage

Prominent bankers in the country on Tuesday requested the Reserve Bank of India (RBI) to ensure that there is no regulatory arbitrage in offering specialised banking licences to some of the new players.

RBI had made it clear that seeks to strengthen the banking structure in India over the next few quarters through new entry, branch expansion and new varieties of banks. Accordingly, it had invited views from chiefs of existing banks on this subject.

Speculations were rife in the Mint Street circles that entities getting specialised banking licence may be granted some relaxations. In the sense, they may not be burdened with the obligation of priority sector lending. 

When quizzed by media after bankers' meet with the RBI Governor, bankers maintained that RBI was still to finalise the regulations for specialised banking licence. 

State Bank of India chairperson Arundhuti Bhattacharya said, "We have made the point that we definitely do not want regulatory arbitrage. We also definitely do not want them to come into areas, which might be cross-subsidising some of the areas that the universal banks are doing currently." 

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