Saturday, January 15, 2011

BANKS OPPOSE GRANTING NEW LICENCES TO BUSINESS HOUSES

Banks have opposed corporate houses being given banking licences due to "unsatisfactory past
experiences" in their feedback to the Reserve Bank of India's discussion paper on new licences in
August. According to banks, it would also create an uneven playing field due to the large capital
buffer that would be available to banks sponsored by industrial or business houses. Banks do not
favour non-banking finance companies promoted by industrial houses entering the banking sector,
either. Banks were in favour of allowing only standalone NBFCs to promote banks and, at the
same time, barring NBFCs sponsored by industrial / business houses.

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