Not the time for RBI to be adventurous. If bank ownership isn’t broken, don’t try to fix it

The Reserve Bank of India’s Internal Working Group startled everyone last week when it recommended that “large corporate/industrial houses may be allowed as promoters of banks only after necessary amendments to the Banking Regulation Act, 1949 (to prevent connected lending and exposures between the banks and other financial and non-financial group entities); and strengthening of the supervisory mechanism for large conglomerates, including consolidated supervision.” In fact, so startling are the words “large corporate/industrial houses may be allowed as promoters of banks…” that you can read the rest of the sentence and the report later.

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