Blaming it on optimism of bank licence applicants…

The comments keep getting weirder on payment bank dropouts. First there were talks of some kind of a penalty and now this blame game.

The bank licencor now says drop out players were apparently too enthused:

On Monday, Mundra said while the entry barrier for licences was high in the country, the number of applicants who technically qualify to float niche banks was large, but not all could be thinking through their plans in advance.

“Even with big qualification barriers, we get a large number of applications. Sometime while doing that (applying for licence), some of them will be having some undue optimism, as we have seen in the recent episodes. But some of them also get wise within time and before they move in the direction, somewhere they decide to do a course correction, as a few people have done in the recent past,” Mundra said. 

Really? The purpose of licencing was to filter the prudence from undue optimism.

The problem was hype created by the regulator and media without looking at basics. At some level one has to accept that it was kind of luddite licencing. You end up falling into your own trap.

A market driven process will win in all such selection matters. No amount of caution and expertise at a centralised level can work. High optimism and deflation of same is an ongoing experience in any industry. The players figure out when to enter and exit. But in banking all this depends on the whims and fancy of a regulator. Hence all this chaos over getting licences and exiting from the same. In other industries, these things are far simpler.

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