Banking Licenses to Corporate May be a Bad Idea

As per the suggestions of the Internal Working Group of the Reserve Bank of India, the big business groups may be allowed to promote banks in India. The government must consult experts and follow due diligence before it takes the final decision as this decision may cut deeply than the benefits.

It is certain that the entry of big business houses in the banking sector's will increase the lending capacity of the banking sector as whole and accelerate the development of financial services and its penetration but at the same time the risk in the banking sector will surely increase substantially. It is quite possible that this single decision may jeopardize the whole banking sector in particular and the economy in general.

According to the reply of Rajya Sabha Un-starred Question Number 1492 which was answered on 18 July 2018, the total amount of bad loans in the country is Rs. 9.62 lakh crores as on 31st March 2018 of which Rs. 7.04 lakh crores belong to industry alone. The share of industry is 73.2%. This fact itself is self-expletory.

Rajeev Upadhyay

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