RBI Governor explained that careful analysis is done to ensure an application passes the ‘fit and proper test’ to keep the trust of depositors intact.
Reserve Bank of India Governor Shaktikanta Das on Friday said that the central bank neither encourages nor discourages applicants seeking banking licence and that those applications that pass the ‘fit and proper test’ will go through.
The RBI Governor’s comments came in a recent interview with Zee Business where he was asked regarding the perception of RBI not being keen on granting banking licences. He talked about the key aspect of the process, calling it a “sacred function”.
The RBI Governor explained that careful analysis is done when ensuring an application passes the ‘fit and proper test’ to keep the trust of depositors intact in the financial system.
Responding to a question of mergers of small banks with big banks, the RBI Governor said that if such a small bank would desire a merger with a big bank, the law has provisions that need to be followed. Once both banks have a consensus on the merger, the 'fit and proper test' needs to be passed before the merger outcome is analysed by RBI.
"There is no mindset to encourage or discourage applicants. RBI examines applications with an open mind," he added.
The RBI governor also opened up on the steps being taken to strengthen the financial system.
"RBI has always aimed to keep the banking sector and financial system robust and strong. Attempts to fulfill the same have always been taken and will be taken in the future," he said.
"To make the financial sector stronger and meet the need of emerging requirements, RBI has taken steps in the recent past such as new regulatories being introduced for NBFCs ; introduction of new governance framework for banks. New regulatory framework for urban cooperative bank framework has been introduced as well as new regulatory framework has been announced for digital lending, recently," he added.
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