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RBI grants IDFC,Bandhan bank licences in cautious experiment

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(@rahul)
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The Reserve Bank of India (RBI) on Wednesday granted two preliminary licenses to set up new banks in a country where only one household in two has access to formal banking services.

The approval of licences for IDFC Ltd and Bandhan Financial Services marks the start of a cautious experiment for a sector dominated by lethargic state lenders, many of which are reluctant to expand into rural areas or towns where banking penetration is low. No new Indian bank has been formed since Yes Bank in 2004.

Proponents of more licences hope deep-pocketed corporate-backed banks will do more to serve these markets, but critics worry about whether companies can strictly separate their retail banking operations from their main businesses.


   
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