FIN HOLDING FIRM MUST FOR ENTERING BANKING SPACE

The Government and Reserve Bank of India (RBI) have decided to make it mandatory for corporate groups wanting to set up banks to ring-fence their financial sector operations from other businesses by setting up a Financial Holding Company (FHC). For the existing financial conglomerates, however, conversion into FHC would be optional. Officials also indicated that companies being
investigated by the CBI, Central Vigilance Commission and Enforcement Directorate will not be permitted entry in the banking sector. This could dash hopes of some companies which are embroiled in the 2G spectrum scam but are known to be interested in a foray into the banking sector.