Major Privatization in Banking Sector: RBI may allow Industrial tycoons to open Bank in India

Privatization in Banking Sector

RBI is planning to bring a major reform in Banking Sector by allowing Privatization in Banking Sector. The Government will allow the Industrial tycoons such as TATAs, Birlas etc. to set up their own Banks. Thus, the Government is considering to relax the banking rules by allowing the large corporations to set up full scale banks similar to private-sector lenders HDFC and ICICI Bank.

According to the sources, the industrial houses having less than 60% of their turnover from non-financial entities will not be allowed to apply for bank licenses and their equity participation will be allowed for 10% only.

Recently, the RBI also announced that corporate sector could set up payments banks for the first time and then RBI’s internal working group (IWG) confirmed this news while releasing a report on the ownership guidelines and corporate structure for Indian private sector banks.

Officials have said, “We need to open up the banking system but the move will be designed with “abundant caution” and will need stonewalling from misuse. Opening up banking sector will come with greater regulatory vigilance on banks, financial institutions.”

Therefore, it will be major reform in the Banking Sector as the leading businesses like Reliance or TATA may open their Banks. It will have both pros and cons. Since it is a developing story, so stay tuned with Manthan Experts to keep updated with this story.

Sources – RBI May Allow Privatization Of Banks Under Tatas, Birlas, Ambanis

Knowledge Source:

RBI proposes to raise promoter’s capital in private banks

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