It has been suggested that large corporate and industrial houses should be allowed to act as promoters of banks. Critically analyze. – IASPOINT

It has been suggested that large corporate and industrial houses should be allowed to act as promoters of banks. Critically analyze.

Historically, RBI has not been very liberal in providing banking licenses to private players. The last ones to get the licenses were IDBI and Bandhan Bank, which too for specific purposes.

Advantages of allowing large corporate houses as promotors of banks:

Various forms of participation:

Concerns:

Way Forward:

RBI has recently set up an internal working group to look into the essential conditions to be adhered to, by corporate houses and other private players before formally entering the banking system. It suggested:

Recent failures in internal/external control have necessitated far more strict regulation and efficient use of ICT tools.

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