This blog post is in continuation of the previous blog posts on Raghuram Rajan's report titled "A Hundred Small Steps" written in 2008 whilst he was with the Planning Commission of India.
Proposal 11: Free banks to set up branches and ATMs anywhere. "Domestic banks have not had the freedom to set up branches anywhere thus far, and will not have anticipated such liberalization (which was not an element of the RBI roadmap). Given that foreign banks have deeper pockets, experience, and skills relative to domestic banks in rolling out a branching strategy in the newly liberalized environment, the Committee believes it necessary to allow a period of say two years from the announcement of the policy till the liberal licensing policy applies to domestically incorporated subsidiaries of foreign banks." -- I cannot see a reason why banks should not be allowed to open new ATM branches at their will.
Proposal 12: "Allow holding company structures, with a parent holding company owning regulated subsidiaries. The holding company should be supervised by the Financial Sector Oversight Agency (see later), with each regulated subsidiary supervised by the appropriate regulator. The holding company should be well diversified if it owns a bank." -- This was allowed in India till a recent government regulation made it mandatory for holding companies to get a banking license and L&T Holdings was not able to get a banking license. List of holding companies looking for a banking license right now: 23 holding companies looking for a banking license
Proposal 13: "Bring all regulation of trading under the Securities and Exchange Board of India (SEBI). In areas where multiple regulators share concerns about a market (for example, RBI has a legitimate interest in the government bond market), regulators will have to cooperate even after the supervision of trading moves to SEBI." - A single regulator would definitely make regulations clearer and remove any ambiguity from overlapping authorities.
Proposal 14: "Encourage the introduction of markets that are currently missing such as exchange traded interest rate and exchange rate derivatives." This would help exporters and importers hedge their currency risks significantly.
Proposal 15: "Stop creating investor uncertainty by banning markets. If market manipulation is the worry, take direct action against those suspected of manipulation." -- There should be transparency and oversight of market operations to ensure manipulation does not happen. Strict fines could help contain such activities.
Link to previous blog post in this series: A Hundred Small Steps: Part 2
Next blog post in this series: A Hundred Small Steps: Part 4
Proposal 11: Free banks to set up branches and ATMs anywhere. "Domestic banks have not had the freedom to set up branches anywhere thus far, and will not have anticipated such liberalization (which was not an element of the RBI roadmap). Given that foreign banks have deeper pockets, experience, and skills relative to domestic banks in rolling out a branching strategy in the newly liberalized environment, the Committee believes it necessary to allow a period of say two years from the announcement of the policy till the liberal licensing policy applies to domestically incorporated subsidiaries of foreign banks." -- I cannot see a reason why banks should not be allowed to open new ATM branches at their will.
Proposal 12: "Allow holding company structures, with a parent holding company owning regulated subsidiaries. The holding company should be supervised by the Financial Sector Oversight Agency (see later), with each regulated subsidiary supervised by the appropriate regulator. The holding company should be well diversified if it owns a bank." -- This was allowed in India till a recent government regulation made it mandatory for holding companies to get a banking license and L&T Holdings was not able to get a banking license. List of holding companies looking for a banking license right now: 23 holding companies looking for a banking license
Proposal 13: "Bring all regulation of trading under the Securities and Exchange Board of India (SEBI). In areas where multiple regulators share concerns about a market (for example, RBI has a legitimate interest in the government bond market), regulators will have to cooperate even after the supervision of trading moves to SEBI." - A single regulator would definitely make regulations clearer and remove any ambiguity from overlapping authorities.
Proposal 14: "Encourage the introduction of markets that are currently missing such as exchange traded interest rate and exchange rate derivatives." This would help exporters and importers hedge their currency risks significantly.
Proposal 15: "Stop creating investor uncertainty by banning markets. If market manipulation is the worry, take direct action against those suspected of manipulation." -- There should be transparency and oversight of market operations to ensure manipulation does not happen. Strict fines could help contain such activities.
Link to previous blog post in this series: A Hundred Small Steps: Part 2
Next blog post in this series: A Hundred Small Steps: Part 4
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