Connection Between Bank Competition and Bank Performance in India in Light of the Reserve Bank of India's Complaint

Abstract

The Reserve Bank of India suspected a cartel among 15 banks in fixing interest rates on deposits of the savings bank accounts over a period from 2011-12 to 2012-13 and lodged a complaint with the Competition Commission of India. The latter could not find any motive of the banks to collude and hence ruled out the complaint. The authors collected data on the banks' activities and performances on the said periods and examined in this chapter whether the commission was right in ruling out the complaint. The results of the analyses in this work lead to the conclusion that the commission was right in ruling out the complaint, but there are certain limitations and policy prescriptions that cropped out of this work, which should be conveyed to policy makers and researchers.