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The new players are unlikely to have any impact on the banking sector or existing players, and the RBI needs to increase the savings account interest rate to 6%, says Rana Kapoor, Managing Director & CEO, YES Bank, in an interview with Amit Shanbaug.

Two banks have got the nod to set up operations in the country. What will be the impact of new entities on the banking sector?

The RBI has stated that banking licences, particularly differentiated licences, will be on tap in the future. Much like YES Bank, which started operations 10 years ago, both new and existing players will focus on innovation and ensure the best quality service to their customers. As far as the impact on existing players is concerned, they have already reached a significant size, scale and critical momentum. The new players will require a long gestation period to transform their operations from NBFC’s to banking, imbibe strong processes, systems and methodologies, and create an effective risk and compliance architecture. The new banks, under the universal licensing structure, will face challenges as they will have to build branch infrastructure and product diversity while providing for financial inclusion, PSL and CRR/SLR reserves. They will take at least 10-12 years to be meaningful competitors to existing banks.

This article has been extracted from http://economictimes.indiatimes.com, please click on this link to read the article in full http://economictimes.indiatimes.com/opinion/interviews/savings-bank-interest-rates-should-be-raised-to-6-rana-kapoor-md-ceo-yes-bank/articleshow/34244103.cms

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