Rajan, Viral Acharya rip apart RBI over bank licences for large corporates

The duo said banks in India are rarely allowed to fail, which helps them garner huge deposits. If banks are owned by industrial houses, it can lead to bad lending

Former Reserve Bank of India (RBI) governor Raghuram Rajan and deputy governor Viral Acharya on Monday sharply criticised the central bank’s internal working group (IWG) recommendation of allowing industrial houses to float banks.  

“Why now? Have we learnt something that allows us to override all the prior cautions on allowing industrial houses into banking? We would argue no. Indeed, to the contrary, it is even more important today to stick to the tried and tested limits on corporate involvement in banking,” Rajan and Acharya’s joint statement, released on Rajan’s LinkedIn handle, read.  

Giving licenses to industrial houses will concentrate economic