RBI allowing corporates in banking is a "bad idea"
First Published Nov 24, 2020, 11:32 AM IST
The recommendation by Reserve Bank of India's internal working group to allow industrial houses to float banks has kicked up a storm. Especially miffed with the IWG recommendation were former Reserve Bank of India Governor Raghuram Rajan and ex-Deputy Governor Viral Acharya, who expressed their reservations in a three page note. Here are key concerns that they raised. Read on...

"Many technical rationalisations proposed by RBI's Internal Working Group are worth adopting, while its main recommendation, to allow Indian corporate houses into banking, is best left on the shelf."

"Why now? Have we learnt something that allows us to override all the prior cautions on allowing industrial houses into banking? We would argue no. Indeed, to the contrary, it is even more important today to stick to the tried and tested limits on corporate involvement in banking."