Mumbai:
The Competition Commission of India (CCI) has asked
the Reserve Bank to allow commercial banks operational
freedom in areas like branch expansion and opening of
new ATMs, in order to unshackle the banking sector.
The
one-man Competition Commission comprising Vinod Dhall
recently made a presentation to RBI top brass in Mumbai
expressing concern over the lack of operational freedom
for the banks, which, the commission pointed out, is stifling
competition among them.
Under
the existing norms, banks are required to seek RBI's permission
for every small operational matter, including opening
new branches, their location and size.
"The
banks are required to seek permission even on matters
like whether the ATM would be located on the ground floor
or the first floor of a building," CCI said in its
presentation.
Several
parameters like interest rates on the saving accounts
are still regulated by the RBI leaving little scope for
competition.
"Forcing"
mergers on the banks without determining its impact also
go against the spirit of free competition, the CCI pointed
out.
To
drive home its point, the CCI pointed out the insurance
sector, which has seen an impressive growth with around
25 new players in a short span of time. Against this,
the CCI said, because of excessive regulation only two
new banks could open in the last 10 years.
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