Stock Market

Opening a bank is easier than a restaurant: Pratip Chaudhuri

The Reserve Bank of India has sought views on its draft guidelines for ‘on tap’ licensing of universal banks in the private sector. 

It has sought comments on its draft guidelines from banks, non-banking financial institutions, industrial houses, other institutions and the public at large. The last date for suggestions to be sent is June 30. 

Based on the experience of licensing two universal banks in 2014 and that of granting in-principle approvals for Small Finance Banks and Payments Banks, the Reserve Bank of India has now worked out a new framework for granting licences for universal banks on a continuous basis. 

“Opening a bank is easier today, than opening a restaurant,” said Pratip Chaudhuri, former Chairman of State Bank of India.

He said the Reserve Bank of India has relaxed the rules and it may become easier for banks to get a licence.

“So many banks that were licensed in the late 1990s and early 2000s, folded up and eventually [got] sold to other banks. This shows that ít’s easier to start a bank but difficult to run.” 

But Siddharth Purohit, Angel Broking, did not share Chaudhuri’s view. He said that although the RBI would see a queue of new applicants lining up, the banking regulator being extremely selective, will only issue licences to eligible candidates.