Jury still out on giving bank licences to industrial houses: RBI official

Given that banking is a highly leveraged business dealing with public money, it makes sense to keep industry/business and banking separate, says RBI deputy governor M Rajeshwar Rao

Reserve Bank of India (RBI) deputy governor M Rajeshwar Rao on Wednesday defended the central bank’s decision of not allowing industrial houses to float banks, and said more deliberations are needed before RBI changes its stance on this issue agreed back in 2001.

An internal working group (IWG) of the RBI had recommended allowing industrial groups into banking, but late last month the RBI said it kept on hold the two recommendations of allowing industrial houses and large non-banks to float banks.

However, RBI had accepted 21 of the 33 recommendations of the group that submitted its report a year