The Central Bank panel proposal to allow business houses to get bank licenses would be disastrous. The retrograde idea of allowing corporates and business houses to enter the banking sector and set up banks, if implemented, will completely reverse the enormous gains made in the last 50 years of retrieving the banking sector from the clutches of business houses. Moreover, only the politically connected corporate houses will get the bank licences. And how can if the banks owned by Reliance, Tata and others make good loans when they themselves are borrowers? Would the amendments to banking regulation act disallow them to borrow from the banks they own? The government has also been cracking down on economic crime to assuage public anger over absconding businessmen. There will also be a risk of promoters giving loans to selves. Depositors interest cannot be protected in the corporate-owned banks. Corporate banks are equal to scams making cheap credit availability to self at will thereby diluting the equity schemes for public and investing funds. The banks should remain as public sector and the move is aimed at weakening the public sector banks.
