No reason to deny bank licence to qualified corps: Chidambaram

Comments (2)
aahuf wrote:

FM is right, but we must realise that RBI does not have preventive mechanism in place- in case managements decide to misuse. Being private- these banks escape from the CVC control also, based on funny logic that it is private money, whereas the fact of the matter is that Banks lend money raised from public deposits. World over experience is that it is difficult to ensure proper controls on large houses in such cases. in our own country- Bank Of Rajasthan, Global Trust Banks are examples.

Jan 30, 2013 10:51am IST  --  Report as abuse
lswain wrote:

The Finance Minister has put the ball sqarely in the Central Bank’s court – it is RBI that will set up the eligibility guidelines!
However, it is a moot question whether corporates should be permitted to set up banks – there are far too many issues of Public Interest at stake!!
I would support extending eligibility to professionally-run corporates, whose cash surpluses may be put to good use. However, elaborate checks and balances need to be put in place, in order to prevent the sponsoring corporate / group to siphon off funds from the bank or to prevent bad credit decisions.
The eligibility criteria must, however, be equitable and leave no scope for ambiguity or for unwarranted regulatory scrutiny.

Jan 30, 2013 4:30pm IST  --  Report as abuse
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