Issue of new banking licences may be delayed

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

Your mutual fund investments at Risk!!

The recent multi-crore advertisement campaigns undertaken by some of the large mutual fund (MF) houses like HDFC Mutual Fund and Franklin Templeton Asset Management have raised several eyebrows on whether these companies are using investors' funds to boost their "brand equity".

Though these multi-crore ad campaigns are not illegal, they have raised ethical issues when the regulator - Securities & Exchange Board of India (SEBI) has been working to cut costs for investors, including banning of entry loads. And, it is noteworthy that all mutual fund schemes' advertisements go through the SEBI before going public.

Billboards and signs at traffic lights across Mumbai and Delhi that have sprung up display the companies prominently instead of individual funds, which normally is the case. One such advertisement reads - "choose a healthy investment-HDFC Mutual Fund SIP." The other - "Invest in Franklin Templeton Mutual Fund." At the bottom of the boards, one of their funds' name is written in a small font, the corpus from which possibly the cost of promotion is met.

Read More:

Financial News Simplified by PersonalFN