The Reserve Bank couldn’t have made a better choice than government-owned infrastructure financing outfit IFDC and micro-finance lender Bandhan for issuing “in-principle” approval to set up new banks. Bandhan, for instance, has 70 per cent of its branches in rural areas and has been in micro-lending for 13 years without a blemish. The RBI’s decision is non-controversial, and no one can accuse it of favouring some business houses over others given how vitiated today’s business environment is. There were 27 entities, including many high-profile business houses, and one can just imagine the charges of crony capitalism if one or two got approvals and not others. Also, the BJP has been opposing the grant of new bank licences, as it felt the RBI should have waited till after the elections. There is now no reason for it to feel aggrieved as these two names are politically neutral.
In India Post’s case the RBI said it will discuss the issue with the government. It had earlier asked the department of posts to get Cabinet approval to convert India Post into a bank, while the Union Cabinet asked the DoPT to obtain clearance from the investment promotion board, and that is where the matter is inexplicably stuck, according to reports. One hopes that a decision is taken soon as the reach of India Post, with its over 155,000 branches, is unmatchable, and it has been in the past few years undertaking a huge modernisation and training programme, which includes assistance from Infosys and TCS.