Corporate houses may not get bank licences
Posted on: 19/Mar/2014 4:52:07 PM
Industrial houses aspiring to set up banks could be in for some disappointment, as the Reserve Bank of India (RBI) is in no mood to oblige any of them.
Sources familiar with the developments said while the licensing process was in the final lap, a final announcement was still some time away.
While the names of several business houses were considered during discussion, the thinking in the important corridors of the central bank headquarters favoured caution.
RBI is not alone in its caution. Regulators in the US and South Korea do not allow industrial houses to set up banks; Australia, Canada, the UK and Hong Kong allow it but with restrictions on ownership and voting rights.
Besides, there has been widespread opposition from several quarters. Many economists have cautioned against the move, as the risks might outweigh the benefits. Former RBI governor, Y V Reddy, too, has advised careful weighing of risks vis-a-vis benefits before such a step.
