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RBI Governor Shaktikanta Das  (ANI Photo )
RBI Governor Shaktikanta Das (ANI Photo )

Panel’s opinions on bank licences should not be read as RBI’s: Das

The working group has given a certain point of view but RBI has not taken any decision so far, governor Das said

Mumbai: The recommendation of a Reserve Bank of India (RBI) committee to allow large industrial houses into banking should not be misconstrued as the central bank’s views, RBI governor Shaktikanta Das said on Friday, after the panel’s opinion came under criticism.

“Let me say very clearly that it is a report by an internal working group of RBI. It should not be seen as RBI’s point of view or decision and that has to be clearly understood," said Das.

The internal working group had two external members who are also members of RBI central board and the group has acted independently and they have had their independent deliberations, he said.

“They have given a certain point of view. RBI has not taken any decision on these issues so far," he said.

The regulator’s approach is consultative, Das explained.

The report of the internal working group is now in the public domain and after getting comments from various stakeholders, RBI will examine the matter and take a decision, he said.

The working group recommended giving banking licences to large industrial houses. The panel has also suggested that large non-bank lenders with asset sizes of more than 50,000 crore, including those owned by corporates, should be considered for conversion into banks, provided they have completed 10 years of operation.

Last week, experts including former central bank governor Raghuram Rajan had warned against such a move. “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," said a LinkedIn post by Rajan and former RBI deputy governor Viral Acharya.

As industrial houses need financing, they can get it easily, with no questions asked, if they have an in-house bank, they had said. The history of such connected lending is invariably disastrous, they had said and wondered how a bank can make good loans when it is owned by the borrower.

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