Deregulation, New banks may be forced to offer higher rates on savings and fixed deposits
A deregulated bank savings account may force bank operators new to offer significantly higher yields in order to encourage people to move their "idle" money from their existing banks. "Unless the new banks offer significantly higher rates on savings and fixed deposits, it will be difficult to attract new customers and strengthen their deposit base," said the CEO of a company that is likely to ask of banking licenses after the central bank ends guidelines.
The draft guidelines are created for public debate, the RBI said a wide range of conditions, including a minimum of Rs 500 crore Networth for companies to qualify for the establishment of banks.
The RBI, however, is unlikely to pass final licensing of new banks as Parliament approves the banking laws of the time (Amendment) Act 2011.
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"It 'was announced draft guidelines, which amend Regulation Banking Act 1949, the Council considered, including some that are vital to the finish and implementation of policies for the licensing of new banks to the private sector," RBI Governor D Subbarao said the monetary policy review on Tuesday.
Source: HT
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