Mr. P Chidambaram, the former finance minister has thrown a huge criticism on Reserve Bank’s latest proposal which stated to allow the corporates to enter the banking sector and set up banks. He has made statements saying and calling all this a “dangerous agenda” stating it as a part of a deeper game plan to take over the control of the banking industry. He has also said that, if this particular proposal had been implemented then it would take place a chuck of the nation’s vast economic resources in the hands of the corporate sector.
The virally circulated copy of Mr. Chidambaram’s video call contains the content in which it was said by him that, “The total deposits of the banking industry are of the order of 140 lakh crore, and if the business houses have been allowed to own banks, then they will take over with a small equity investment which leads to control very large amounts of the nation’s financial resources”.
However, the criticism just did not have its end with Mr. Chidambaram, but continued its way to both former Reserve Bank Governor Raghuram Rajan and former Deputy Governor Viral Archarya, too. They have also made statements that have strongly criticized the proposal and they said it will further exacerbate the concentration of both economic and political power in certain business houses. They further added, that even if the government was in need of more banks, it was not a wise decision to allow industrial houses into banking, as it would reflect on the history of inter-connected lending which happened to be a disaster.
S&P Global Ratings has also come in support of this proposal has its own risks and have expressed saying this idea was stated as “fraught with risk”.