I had done a post long long ago about needing various types of banks….let me enumerate….
1. Banks which will cater EXCLUSIVELY to the lowest strata of society: catering to the urban poor and should be staffed by very normal kids and adults living in small houses.
2. Banks which will cater to the senior citizens.
3. Banks which will cater to the SME – for their personal banking and their business banking.
4. Banks which can accept deposits, can sell financial products, can sell financial services, BUT CANNOT LEND – all their investments have to be ONLY in Government securities. Period. Zero credit risk, not even much of ALM worries.
5. Banks catering to the local POPULATION only…like a ‘Chembur Naagrik Cooperative bank’ – or a ‘Besant Nagar Co-op Bank’ – which will take deposits, open current and SB accounts and LEND only, only only to companies in their catchment area. Maximum loan can be Rs. 20 Lakhs.
6. Banks which can ONLY lend for RETAIL. Period.
….thus forcing banks to go out and earn money. They will also give a lot of information about what is happening in their areas of specialisation. RBI can use all that data – which will be much better, granular, and detailed.
well articulated by Jaggi…
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