Saturday, November 28, 2020

Banking Licenses to Corporate May not be a Good Idea


The recommendations of the Internal Working Group (IWG) of the Reserve Bank of India (RBI) allow the corporate houses to promote banks in India. This will bring in some benefits such as increased lending capacity and development of financial services but a number of problems such as conflict of interest, intergroup lending, fund diversion, corporate governance, financial stability and contagion arising due to corporate default as well as the economic concentration which will lead to increased inequality.