30 August 2011 ~ 0 Comments

Banking on corporates

Banking on corporates Although final licensing may still be some time away, there is much excitement in Dilli over the prospect of granting new banking licences. With corporate majors like Tata, Mahindra & Mahindra, AV Birla and L&T among those publicly hopeful of entering the banking sector, the suspense is naturally high. Industrial houses have long waited to enter (or rather re-enter) the banking sector and this could then be their moment. But there is still an air of uncertainty about what kind of and whether at all the corporates will get RBI’s nod. Apparently while the finance ministry is in favour of granting licences to them, the RBI seems to harbor some reservations. At the moment, the ministry is of the view that corporates should be granted bank licences if the bank is an independent entity. The RBI fears that in allowing licences to corporate houses, some may be tempted to divert funds from the banks to their other operations. Hopefully, an agreement will be reached soon.

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