The Policy stated that the principle of “Universal Banking” was a desirable goal and any DFI, which wished to transform into a bank, should have the option to do so, provided it was able to fully satisfy the prudential norm applicable to the banks. For the purpose, such a DFI was expected to prepare a transition path for consideration of the Reserve Bank.
Thus, in due course, the recommendation of the Narasimham Committee to have only banks and the restructured NBFCs in the system, could be operationalised. Accordingly, in April 2001, the FIs were advised several operational and regulatory issues relevant in evolving their transition path to a universal bank and for formulating a road map for the purpose. 23.