Interview | Should corporates be allowed to own banks?

Former RBI Deputy Governor & Ex-Chief Economic Adviser Rakesh Mohan talks about the proposal to allow corporates to own banks and the state of the economy.

A Reserve Bank of India (RBI) working committee last month recommended that bank licences be issued to corporate houses after due amendments are made to the RBI Act to prevent connected lending.

The panel also said that large NBFCs could be converted into banks even if they are part of conglomerates provided they are profit-making and have a successful 10-year record.

RBI Governor Shaktikanta Das himself made it amply clear at the monetary policy press conference that the RBI is awaiting suggestions from the public and the working group views are not its views.

So far many voices have cautioned against the move – two former RBI governors, three former deputy governors, two former chief economic advisors, and one former finance secretary have cautioned against the move.

While some veteran bankers and financial sector experts like KV Kamath have welcomed the decision.

To discuss this, Latha Venkatesh spoke to the former deputy governor of RBI, Rakesh Mohan.