New Delhi: Commenting on the report of the Internal Working Group set up by RBI to review extant ownership guidelines and corporate structure for Indian private sector banks, Dr Sangita Reddy, President, FICCI said, “The set of recommendations made by the RBI working group are path breaking and can potentially change the landscape of the Indian banking sector. The roadmap that has been laid out clearly indicates that there is a strong desire to fortify the Indian banking sector and enable it to contribute to the ever-growing needs of a large and diversified economy like India, which aspires to be a US$ 5 trillion economy over the next few years. We welcome the suggestions made and hope that these would be followed up with a time bound implementation plan.”
“Amongst the various suggestions made, two in particular stand out. First relates to allowing large corporates and industrial houses as promoters of banks after necessary amendments to the Banking Regulation Act, 1949. FICCI had been advocating this for long. With a strong supervisory mechanism one can ensure maintaining an arm’s length distance from connected parties and avoid any conflict of interest. Second is the recommendation related to allowing well run large NBFCs, with an asset size of Rs 50,000 crore and above, including those owned by a corporate house, to be converted into banks. This had been a key ask of the FICCI NBFC Committee as there is a clear need for large NBFCs to have a defined growth path that would allow them to both support greater economic activities as well diversify their sources of funding,” added Dr Reddy.