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RBI warms up to the idea of corporates in banking The much-awaited discussion paper of the Reserve Bank of India (RBI) on the entry of new banks in the private sector has thrown many interesting proposals, suggestions and ideas, including a higher capital of Rs 1,000 crore, a 50 per cent ceiling on foreign holding and the possibility of allowing industrial houses and finance companies. Interestingly, the RBI paper has not made any firm proposals, but preferred to offer pros and cons of various parameters and the past international experience on banking licences. The RBI paper proposed that industrial and business houses that have predominant presence and experience in the financial sector could be allowed to set up banks subject to other due diligence process, but also highlighted the potential risks by involving them. "Industrial and business houses have a long history of building and nurturing new businesses in highly regulated sectors such as telecom, power, automobiles, defence, infrastructure projects like airports, highways, dams and ports," it said. Several industrial houses like the ADAG, the Mahindras, the Aditya Birla group, the Tatas and the Bajajs are likely to apply for new licences. Many of them had evinced interest in getting into banking after Finance Minister Pranab Mukherjee announced the plan to give more private bank licences in the last union budget. However, the RBI has expressed reservations about giving banking licences to business groups with interests in real estate. Back |
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