The large corporate houses eyeing a pie of the banking sector in India may have to wait a little longer, as the Government is of the view that corporate houses should be allowed to open new banks in the country only after the banking laws are amended to empower sector regulator -Reserve Bank of India (RBI), to monitor the parent or subsidiary companies of a bank.
This follows concerns raised by the central bank that the ownership structure of large business groups may lead to a turf war among regulators if they were given licences to run banks.
RBI in its report has urged that business houses have the entrepreneurial and managerial talent of running mutual fund and insurance companies. They (business houses) have successfully penetrated into rural India, and that their talent could be harnessed in the banking sector. However, existing banks are wary about corporate houses getting banking licences as this may create an uneven playing field due to the large capital buffer that would be available to banks sponsored by industrial or business houses.
Orginal News source:
PersonalFN.com
Read more Financial news:
Budget’11 can be a step closer to DTC
This follows concerns raised by the central bank that the ownership structure of large business groups may lead to a turf war among regulators if they were given licences to run banks.
RBI in its report has urged that business houses have the entrepreneurial and managerial talent of running mutual fund and insurance companies. They (business houses) have successfully penetrated into rural India, and that their talent could be harnessed in the banking sector. However, existing banks are wary about corporate houses getting banking licences as this may create an uneven playing field due to the large capital buffer that would be available to banks sponsored by industrial or business houses.
Orginal News source:
PersonalFN.com
Read more Financial news:
Budget’11 can be a step closer to DTC
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