Regulation of Banks

50% of Indians do not have any access to banks. Even when they do have access, the credit that is kept in it is half of what is saved by Indians. Indians feel that the option to keep one's  own money in bank is not a good one. People would rather buy gold and keep as savings than keep in bank. More safe options are explored. Banking Regulation (Amendment ) Bill was passed three days ago by the Indian Parliament. This Bill was passed to put industry on the path of higher growth ladder. The Bill empowers the banking regulator, Reserve Bank of India(RBI) as it can intervene in management of banks. RBI can now make licenses conditional to the norms sited by it.
By this Bill, government has made it easy for private capital to be invested in the Indian baking sector and at the same time it has raised investor's rights. Previously, government was spending taxpayers money to expand banks. Now private banks will come about as they are allowed to. RBI will keep an eye on new banks and their activities.RBI has power to shut down"sick" banks too. Private banks are more successful for they bring in innovative technological modernisation faster(use of Internet).In management also, private banks are superior and give customer a better service.Private banks benefit by giving confidence to the lenders; and they are trusted better by the borrowers. The profit generated by lending motivates the private banks to expand. The infrastructure created by the private banking sector can be used by the government As rural India needs banks, so that the social security schemes could be promoted more effectively.Private banks will open newer markets which the government can use. The money people have would be more visible to government now.Thus government will benefit by universal banking.Largest savings will be invested in banks--ready for investment as capital.The development of economy is directly linked the banking networks we have, so we will have bigger and better networks.This way the foundation for growth will be made.