RBI panel member defended new recommendations as 'there is nothing new in it'

Sachin Choudari, RBI panel member commented on the latest recommendation allowing banks headed by industrial houses as a robsuting part of achieving 5 trillion dollar economy. And he observed that there is nothing new in allowing corporate houses into banking. Yes Bank and Kotak Mahindra working on this very idea, he underpinned it.

RBI Internal Working Group report published on November 20 recommended allowing large corporates / industrial houses as promoters of banks. In addition, well run large Non- Banking Financial Companies (NBFCs) with asset size of 50,000 crore and more may be considered for conversion into banks after meeting the requirements of 10 years of completion and other additional conditions.

Earlier former RBI governor Raguram Rajan and Viral Acharya, a former deputy RBI governor questioned the timing of the proposal and commented it as a 'bad idea'. Implementation of this policy can result in the concentration of economic and political power in certain business houses, they cautioned.

Indian National Congress supported the counter-arguments of Rajan and Acharya and Former Finance minister P Chidambaram slammed the proposal as a part of a deeper game plan to control the banking industry.