Bring new law to set up banks for poor
The government of India must bring changes in banking law or come out with new legislation to create banks for poor. The existing banks within the current banking structure would not be able to serve the poor that does not lend any loan for the poor despite there is a policy of Union of India’s assurance to empower the unemployed.
Since India is a welfare State, it is for the government to bring new laws to set up new banks. The existing law is to create bank for the rich. With existing structure, the banks will never be able to serve the poor. In order to bring financial services to the poor, a new legislation is required. The new banking law should be such that it could incorporate banks serving poor people.
Many non-government organisations in India, which are dependent for financial assistance on donors, have been running large micro credit programme. They require limited banking licence so that they can function as bank. The government has started giving new banking licence which is good.
In this direction, the Union Government added a mile stone as the Reserve Bank of India granted “in-principle” approval to 10 financial institutions to set up small finance banks under the “Guidelines for Licensing of Small Finance Banks in the private sector”.