Should rbi give license to the entry of private sector banks? - an Indian experience

From the past several years, the Indian Banking Industry has become a web of different type of banks and bank groups in which there is facing fierce competition among themselves. This new competitive environment forced the bank groups to not only retain their share in the market, but to raise it at the new peaks. From the performance evaluation of these bank groups, RBI has decided to give license to new private banks in the Indian Banking Industry. This paper examines RBI decision to implement this new policy change. After the evaluation of the results it is found that old and new private sector banks are really doing well from the past several years. Public sector banks are performing only satisfactorily and nothing great can be said about them. As far as the foreign banks are concerned, they are facing drastic deterioration in their overall profitability and thus fighting hard for their place.