Skip to main content

Corporate as a Bank: prospect, Issue and challenges

 Internal Working Group(IWG) of RBI in a report recommended large corporate and Industrial house allowed ownership of private bank. IWG has been constituted by RBI to review ownership guideline and corporate structure for Indian private Bank.

What are the prospect of allowing Corporate in Banking sector?

  • Indian Banking sector is struggling to meet the credit demand of growing Economy. for eg-       a) The total balance sheet of banks in India is less than 70% of GDP even after three decades of rapid growth in India which is much less than other countries like China where it is 150%.            b)The domestic Bank credit to private sector is around 50% of GDP which is much less than other countries like USA, CHINA, S.KOREA where it is more than 150% of GDP.
  • Indian banks are less cost efficient as compared to global peers because of high NPA and interest rate in the economy.
  • Covid19 has already cut government hand in providing capital to public sector bank. Hence corporate with big resources can provide much needed capital to economy.
  • Indian Economy require big banks with large capital to become $5Tn Economy. top5 bank in world belong to china.
     What are the issue ?

  • Critics argued that it may lead to connected lending(connected lending in simple language is that the promoter of bank is also borrower of bank).
  • Expert argued that it may lead to consolidation of political and economic power in the hand of corporates. Hence the power equation in society change.
  • There is also of fear of Corporates in banking may lead to financial crisis because of there thrust to make profit for eg. 2008 crisis.
Its a tough choice to make considering its positive and negatives but if RBI decided to go ahead with the plan then it must put necessary safeguard in place.
Labels:

Comments

Post a Comment

Popular posts from this blog

Preliminary exam

PAPER-1   (200 marks)                      DURATION TWO HOURS Current events of national and international importance History of Indian National Movement Indian and WORLD Geography-Physical,Social,Economic Geography of Indian the World Indian Polity and Governance-Constitution, Political System, Panchayati Raj,Public Policy,Right Issues etc Economic and Social Development,Poverty,Inclusion,Demographic,Social Sector Initiatives etc General issues on Environment ecology,Biodiversity and Climate Change- that do not require subjective specialization General Science PAPER-2                                                                                    DURATION TWO HOURS Comprehension Interpersonal skills including co...
1 comment
Read more

GENERAL STUDIES-3(MAINS EXAM)

  TECHNOLOGY, ECONOMIC DEVELOPMENT, BIO-DIVERSITY, ENVIRONMENT, SECURITY AND DISASTER MANAGEMENT:- Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. Inclusive growth and issue arising from it. Government Budgeting Major crops-cropping patterns in various parts of the country, - different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers. Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security; Technology missions; economics of animal-rearing. Food processing and related industries in India- scope’ and significance, location, upstream and downstream requirements, supply chain management. Land reforms in India. Effects of liberalization on the economy, changes in...
Post a Comment
Read more

GENERALSTUDIES-4(UPSC)

  Ethics, Integrity and Aptitude This paper will include questions to test the candidates’ attitude and approach to issues  relating to integrity, probity in public life and his problem solving approach to various issues and  conflicts faced by him in dealing with society. Questions may utilise the case study approach to  determine these aspects. The following broad areas will be covered : Ethics and Human Interface: Essence, determinants and consequences of Ethics in-human actions; dimensions of ethics; ethics - in private and public relationships. Human Values -lessons from the lives and teachings of great leaders, reformers and administrators; role of family society and educational institutions in inculcating values. Attitude: content, structure, function; its influence and relation with thought and behaviour; moral and political attitudes; social influence and persuasion.  Aptitude and foundational values for Civil Service, integrity, impartiality and non-p...
Post a Comment
Read more