Reserve Bank of India (RBI) Governor Raghuram Rajan has made out a case for more powers to banks to deal with stressed debt as the country does not have an efficient bankruptcy or corporate resolution system. Rajan saw consolidation as a solution in the medium term, saying premature mergers might lead to 'a potentially bigger problem'. Gross non-performing assets of public sector banks have gone up to Rs 3.14 lakh crore at the end of September 2015.
For new bank licences, Rajan has expressed hope that the old banks will feel compelled to start offering innovative products in order to match new entrants. In order to make banking sector more competitive, RBI has granted approval to 23 entities to operate as banks, including payments banks.
RBI has taken various steps to increase foreign flows into the country. He further added that at 7.4 per cent, India's 2015 third-quarter GDP growth was the strongest among large economies as the rupee was one of the few stable emerging market currencies in 2015; and a clear financial market liberalisation path is attracting foreign investors and making India's financial markets more sophisticated.