Letter to BS: RBI should review its licensing guidelines for banks

Apropos the editorial “Question marks remain over YES Bank rescue” by T T Ram Mohan (Ma­rch 12), it is probably time the regulator reviews its licensing guidelines and the concept of having individual promoters for setting up banks. Many new-generation banks in the private sector with one promoter have failed. As long as the promoters have the freedom to choose and pick directors, banks will not be safe. Directors should be chosen like the way regulators approve the choice of CEOs and statutory auditors under the joint purview of the Sebi and the RBI. Resignation or sacking of a director should ring warning bells requiring special audits. As regards the rescue of YES Bank, the chairman of SBI has gone on record describing the act as a joint venture of the government of India, the RBI and the SBI.

Ganga Narayan Rath, Hyderabad