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Reserve Bank of India mulls more differentiated bank licenses

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Reserve Bank of India mulls more differentiated bank licenses

The Reserve Bankof India is considering issuing more types of differentiated bankinglicenses, in addition to other proposed changes to India's banking structure.

In its April 5 policy statement, the central bank detailed proposalsthat aim to strengthen the banking structure in India, including potentially licensingother niche banks such as custodian banks, as well as banks focusing on wholesaleand long-term financing. A paper related to the proposal will be released for commentby September.

In 2015, the central bank granted differentiated banking licensesto companies to set up payments banksand small finance banks.

In addition, the Reserve Bank of India proposed to redefine bankbranches and permissible methods of outreach in order to facilitate financial inclusionand offer banks the flexibility on the choice of delivery channel in unbanked areas.

The central bank will also formalize an improved supervisoryframework for taking enforcement action against commercial banks for noncomplianceof instructions and guidelines. The framework will be formalized by June.