'Strict caution is required before handing over banks to corporates'

-Warning pronounced by economic experts

After 27 years, the Reserve Bank agreed to do so

New Delhi Dated 27th November 2020 Friday

Twenty-seven years after 1993, the Reserve Bank allowed private entrepreneurs to enter the banking sector. But there are currently differing views on handing over banks to corporates.

Top economists have been saying that strict security measures should be put in place before handing over banks to corporates. Three of the ten stakeholders demanding the administration of the banks were members of the Reserve Bank's internal working group. These members last week advocated for commercial companies to enter the banking sector. These members expressed the view that there is no doubt that private companies will come into the banking sector with ample capital, professional experience and effective management.

But these companies have to have strict security measures when giving loans so that the loan amount is less likely to default.

Among such experts was Shekhar Ghosh, managing director of Bandhan Bank. He said, 'More banks are needed for the growth of the economy. Even if no bank other than the corporates has the capacity to run, our country needs more banks to reach out to more people. So it is possible for private companies to get licenses. But it is also imperative to have a strict security system.

Ghosh further said that the new bank managers must implement strict restrictions and various supervisory systems to solve the problems.

Diwanji, a partner at EY India, said the Banking Regulation Act would bring more restrictions on private banks and strengthen economic affairs.