Context: The Reserve Bank of India (RBI)’s report on the review of the corporate structure for Private Sector Banks (PSBs) emphasises on ‘capital-based’ licensing of private banks.
Benefits of the RBI’s move:
Challenges:
Way Ahead: RBI should consider winding up regional rural banks (RRBs) and local area banks (LABs), which have lost their relevance due to rise of microfinance institutions (MFIs) active in rural/semi-urban areas.