Mumbai, Aug 20 (KNN) A day after RBI gave in-principle approval to 11 applicants for payment banks, Reserve Bank of India (RBI) governor Raghuram G Rajan today said licences for small finance banks will be announced next month.
 
Payments banks and small finance banks will help deepen financial inclusion in the country, Rajan said at an event here. 
 
“Payments banks will compliment universal banks. They are not competing with them. Universal bank have edge over the payments banks with wider product and service,” he added.

Rajan said that payments banks will help reduce costs for customers.

“Banks need to frontload transmission of monetary policy. They should reduce lending rates for boosting demand especially in retail,” said Rajan.
 
“If the rains are good, we may see rural demand coming back in the system,” he said.
 
He said that the challenge for banks in the medium term is the risk of tremendous amount of churn. When it comes to public sector banks, the middle piece (talent at the mid-level) is missing due to freeze on recruitment in the past. 
 
“RBI faces challenges in attracting talent. The risk is skill them, they are grabbed by the market,” he said.
 
In recent times, bad loans have been on the rise. According to Rajan, the thing that worries RBI is that how banks recognise distressed assets in the first place.
 
On devaluation of Chinese currency, the RBI governor said, “Across the globe there has been low demand. There has been a tendency to weaken the currency. We have seen examples of this. China moved on many fronts. Boosting stock market and then action on the currency front.”
 
He said yuan devaluation had had an impact on emerging market currencies and the rupee was not an exception. (KNN Bureau)