largely on the recommendations of the internal working group ( iw g ) constituted by the reserve bank to examine these issues. the reserve bank has accepted 21 out of the 33 recommendations made by the group and had announced this decision on november 26, 2021. however, there are some issues where the recommendations have been extensively debated and therefore require further examination. licensing and ownership of private banks in india 5. it is generally accepted that a deep, stable, and sound financial system contributes to economic growth. but for growth to be truly inclusive, broadening and deepening the reach of formal finance is a pre - requisite. access to formal finance is especially critical for the lower income groups as it provides them with the opportunities to save, invest, avail of credit, and grow their incomes through productive enterprises and activities. this provides them the much1 / 6 bis central bankers'speeches needed insurance against future income shocks and helps them to manage emergencies. the guidelines for licensing of new banks in the private sector issued by the reserve bank since the initiation of financial sector reforms in early nineties, have been guided by the above philosophy. in addition, the choices have also been informed by the need to instil greater competition in the banking system to increase productivity and efficiency. so far, eight sets of licensing guidelines have been issued by the reserve bank, of which four are for universal banks and four pertain to differentiated banks. 6. after the recent iw g report, the public discourse has mostly been concentrated on their recommendation for granting banking license to large industrial houses. however, a little historical perspective on this issue would be helpful. in the licensing guidelines issued in 1993, there was no explicit ban on setting up banks by large corporate / industrial houses ; the licensing guidelines of 2001 did not allow banks to be promoted by a large corporate / industrial house, while in terms of the 2005 guidelines on ownership and governance in private sector banks, large industrial houses were allowed to acquire up to 10 per cent holding in a bank with the prior approval of the reserve bank. under the licensing guidelines issued in 2013, the banks were to be mandatorily set up through a wholly owned non - operative financial holding company ( nofhc ). individuals were not allowed to promote banks under these guidelines, but again there was no bar on large corporate / industrial houses to be promoters. the ‘ on - tap ’ guidelines of 2016 defined large industrial houses and restricted them from promoting a bank, but at the same time, they were

have reliable information about all the borrowers in the financial system. ( ii ) investment in credit information companies 24. rbi has issued a revised directive on november 29, 2013, allowing higher fdi limits to entities which have an established track record of running a credit information bureau in a well regulated environment. this regulatory measure is aimed not only at bringing in the much needed foreign equity support but also to keep intact competition in this sector. as a result of this measure, the foreign partners of the cics are taking steps to increase their equity stakes in the cics and thereby continue to bring in foreign technology support to this long gestation capital intensive industry. conclusion 25. before i conclude, let me revisit the reasons for why the credit information bureaus including cibil, have not received the level of success they would have expected, even after a decade of their existence. in essence, the two users of the credit information, the lending institutions as well the consumers are still wary of the outputs generated by the cics. while on the one hand, the lenders do not see compelling reasons to subscribe to the cic reports for want of appropriate information or analytics, the consumers on the other hand are still sceptical about the authenticity of the cirs. there have been numerous complaints about the cics handing out incorrect reports to the consumers who have to then run from pillar to post to get these corrected. the grievance redressal system in this area, in fact, needs a thorough overhaul. thus, going forward, the challenge for the cics and indeed, for cibil, which has a virtual monopoly over this business is to address the twin concerns that i have mentioned. the purpose of having cics in the system would be best served when the credit needs of deserving people are met in a timely manner and at a reasonable cost. 26. i am sure that the conference would throw up some ‘ actionable ’ ideas which would go a long way in not only spreading awareness about the credit information system in the country but also improving it. i once again congratulate cibil for reaching a significant milestone in their journey and thank them for inviting me to be a part of this conference. i wish you all a very fruitful deliberation ahead. thank you! references : the evolution of credit bureaus in asia - pacific - dr. rita chakravarti and beng - hai chea ( august 2005 ) bis central bankers ’ speeches role and effects