Is the Banking Industry ready for its fate to change, as India is in plans to wide open the doors for big business to lay up in the banking sectors?
The discussion about the ownership of private sector banks has been making rounds by the Reserve Bank. It came out pointing that, only after amending proper supervisions and strengthening of rules and regulations, the “connected lending” issues can be solved and from there over, it could be looked upon by large industrial houses to have permission to own their controlling stakes.
It can be seen that regulation is not ready yet, to reverse its policy of holding conglomerates away from banking. However, the report when considered could come out to pave its way for the entry of backdrop, and also nonbank finances can be acquired by large groups that could convert into banks.
The public-private went hand in hand and have experienced rapid growth in the 1990s when crony capitalism has entered and made a stand slowly in India, where the politicians have taken charge and have begun to unchain the private sector.
When we consider today’s scenario, Prime Minister Narendra Modi has access to all the domestic balance sheets. However, he is now more in a pause mood to explore for a new risk-taking capital due to the heavy hit back of the pandemic. Ms. Priyanka Kishore, Oxfords Economics, have made statements regarding the per capita gross domestic product in 2015 being 12% below pre-virus estimates. This can be concluded as the gist of the RBI internal group’s review of the bank ownership.
When it comes to overleveraged groups, the bank licenses are seen in a way that it is too-big-to-fail nirvana. Regardless, the trust always lies within the savers of explicit deposit guarantee and possesses a huge amount of faith in the regulatory. Here, comes a scenario of Lakshmi Vilas Bank Ltd, where DBS has mounted a rescue in regards with the central bank and deposits have seen a fall of just 2% for the 6months until September. From then on it was revealed and believed that a lender who held negative capital adequate ration was on for a toast!