Controlling the ownership of banks

A credible board, an independent management and recruiting the best talent are better mitigants of control than regulation

The financial sector today represents the foundation of an economy and its smooth functioning is crucial to help industry achieve its full potential. Recent developments such as exchange rate fluctuations, rising non-performing assets, and upcoming loan repayments have eroded the liquidity balance in the Indian financial markets. For industry, strains in liquidity result in non-availability of credit and higher interest costs, curbing investments at a time when demand is set to pick up in the economy.

The Reserve Bank of India (RBI)’s 2016 guidelines on ownership and governance in private sector banks has been the focus of much debate in recent