Letters: The licence ordeal

This refers to the editorial "RBI's welcome conservatism" (April 5). The timing of the Reserve Bank of India (RBI)'s decision to not allow business houses to get into banking takes away its boldness, when we consider that it knows quite well that the current government is not in a position to question RBI's policy. What happens if the new government wants the licences to be issued to corporate houses? Will RBI then have the courage to refuse such a demand? Looking into the history of the banking sector, RBI would toe the government's line citing different reasons and the latter would also avoid a stand-off through a different set of policies. Further, there are too many objections to corporations entering the banking space, giving the impression that they will walk away with the depositors hard-earned funds. The RBI's conservative licensing policy should be matched with an appropriate blueprint to reform public sector banks. The RBI should consider itself lucky if the new government co-operates with it on this arduous journey.

K V Rao Bangalore

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