Consideration of custodian bank licensing by the Reserve Bank of India can enable the development of banking sector the country. Explain (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 4 years
KEY POINTS
A custodian bank is a specialized financial institution responsible for safeguarding a firm's or individual's financial assets.
Need for the custodian banking license
· Current banking players cannot double the credit-to-GDP ratio because of scams and NPAs.
· RBI’s experiment with differentiated bank licences in 2015 did not work due to too many restrictions.
· India needs to have specialised custodian banking if it has to remain attractive for foreign capital flows.
For development of banking sector
· A custodian bank licence can double the Assets Under Custody as it strengthens financial infrastructure in the market.
· FPIs do not want to appoint Indian PSBs as custodians as they are not comfortable with the high NPAs.
· The custodian will not compete against PSBs, universal banks or SFBs for deposits or lending.
· These will target the FPI segment for both services and deposits, and deepen the capital flows.
· By allowing specialised custodian banks, integrated services can be more lucrative for FPIs.
Venkateshwaran R 4 years
kindly provide feedback. Thank you mam/Sir
IAS Parliament 4 years
Good attempt. Keep Writing.
Venkateshwaran R 4 years
aswin 4 years
Please review
IAS Parliament 4 years
Good attempt. Keep Writing.
