India to introduce four-tier banking structure

Will promote financial stability and resiliency.

The Reserve Bank of India, the central bank, plans to introduce a four-tier banking structure to deal with issues such as enhanced competition, financing higher growth and providing specialized services. It said the new structure will focus on ensuring that the structure remains resilient and promotes financial stability.

The first tier might consist of at least four large Indian banks with a domestic and international presence, along with branches of foreign banks. Mid-sized banks (including niche banks with a nationwide presence) will comprise the second tier.

The third tier could consist of old private sector banks, regional rural banks and multi-state urban cooperative banks. Small privately owned local banks and cooperative banks are likely to be in the fourth tier.