A much awaited Bill was passed by the Lok Sabha yesterday. This one was on banking laws. The Bill did three things and that were to give Reserve Bank of India (RBI) more power to regulate banks. Second was to raise the voting power of investors in banks. And third was to allow the state owned banks to raise capital through bonus and rights issue. But a crucial thing that this Bill has done is to clear the path for RBI to issue new banking licenses. This is something several private sector companies and NBFCs have been keenly waiting for. Once the Bill is cleared by the Rajya Sabha, the RBI can sit down and think over how it would go about issuing these licenses.

This move is naturally a cause for celebration and has sent the stocks of most of the banking license hopefuls into a frenzy. The only thing we hope for is that the RBI maintains its conservative stance in this area as well. This means that the licenses are issued with thought and care and not to everyone and anyone. However, given RBI's history of remaining conservative, the possibility of this is bleak.