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The Election Commission of India (ECI) awarded the Reserve Bank of India (RBI) the permission to proceed with licensing the third group of private banks on April 1, 2014. The RBI last permitted new banks in 2003 and 2004, when it allowed Kotak Mahindra Bank and Yes Bank to enter the market. The current licence is believed to assist India’s central bank by expanding the scope of the INR 84 trillion banking industry.
Bandhan Financial Services and the Infrastructure Development Finance Company (IDFC) were both awarded bank licences by the Reserve Bank of India. Over 20 companies are competing for new banking licences, and it is estimated that 1,500 to 5,000 new jobs will be created in the next two years for each new banking licence granted by the Reserve Bank of India.
Banking Entities To Facilitate Job Creation
Retail banking, credit, technology, operations, branch banking, risk, and treasury are some sectors in which considerable hiring is likely to take place. Since India is focusing on financial inclusion, more employment opportunities are projected in smaller cities.
People who have worked in tier 2 and tier 3 cities and rural areas will be in high demand since they can grasp the difficulties of financial inclusion.
Currently, fewer than 30% of India’s population has access to a bank account. There is much work to be done in the banking and financial sectors in India.
The banking and financial institutions can grow and profit by expanding into rural markets, which are underserved.
IDFC alone has had high-profile appointments, including the group head of new initiatives. The Chief Operating Officer (COO) is a former banker and financial services entrepreneur who has been named the group head of the new initiatives.
The additional licences will also result in the creation of many backend jobs, such as those in processing and outsourcing. When a new entity is founded, employment is created not only in the entity, but also in other organisations that are linked to it. This is the case with the new bank licensing.
It is envisaged that the development of new financial companies will reduce India’s unemployment rate. According to reports, people working in banks will retire during the next two years, which will increase the demand for personnel at all levels.
In the future, India will experience a significant increase in employment, and the banking and financial industries will grow and profit.
Potential For Growth
In India’s banking and financial sectors, there is still a lot of work to be done. The rural markets are untouched, and the banking and financial industries will be able to grow and profit by expanding and delving into them.
Various industries have much room to grow in any developing country. This is what the RBI intends to accomplish by issuing licences to new banks. With the entrance of new banks comes increased rivalry, which leads to increased production. As a result of granting licences to new banks, India will experience an increase in employment and a significant increase in service quality.
Digital Banking Platforms In India
Digital banking platforms automate bank operations, allowing banks to offer a variety of digital financial products while also easing digital consumer interactions. Banks may kickstart and safeguard the shift from brick and mortar to a multichannel, digital bank by using a digital banking platform.
However, loan origination and servicing software is a little more limited and meant to simplify the process. Platforms for digital banking administer a variety of banking products, including back-office functions, commercial and retail accounts, etc. As a result, banks can reach customers wherever they live and work using numerous digital channels through their digital banking platforms.
New-Age Banks In India
New-age banking is a cutting-edge banking strategy that is reshaping the financial and Fintech industries.
In India, new-age banks are digital-only banks with no physical offices; they provide a wide range of services that are not available through challenger and traditional banks.
They use artificial intelligence and machine learning to provide end-users with personalised and customised financial services while lowering the overall operating costs. Apart from this, new-age banks have a slew of other advantages.
NITI Aayog Digital Banks
The Aayog proposes a licensing and regulatory framework for digital banks in a paper titled, ‘Digital Banks: A Proposal for Licensing and Regulatory Regimes in India’, which sketches out a potential action plan to make such a bank a reality.
According to the paper, digital banks are banks under the Banking Regulation Act, 1949 (BR Act).
Conclusion
India’s employment is projected to skyrocket in the coming years, and the banking and financial sectors are expected to expand and profit.
In any developing country, several industries have a lot of space to flourish. And it is the RBI’s intention to accomplish this by granting licences to new banks. With the entry of new banks comes increased competition, which leads to increased output. The awarding of licences to new banks will result in employment and also a considerable increase in service quality in India.
