Millennium Post

House panel’s advice to Govt: Let’s keep industry away from banking

In its report tabled in Parliament, the Standing Committee on Finance "voiced their concerns" on the guidelines permitting large industrial houses to promote new banks, apprehending that industrial/business houses may not be geared up to achieve national objectives of financial inclusion and priority sector lending.

"...banking being a highly leveraged business involving public money and public welfare, the committee opined that it will be more in the fitness of things to keep industry and banking separate," the report said.

The committee, headed by senior Congress leader Veerappa Moily said that as on March 2013, out of 15,630 private bank branches, only 17 per cent were in rural areas. It further said efforts should be made to extend the geographic coverage of banks and improve access to banking services through new licences.

"...this goal of reaching of banking services to unbanked areas should not lose sight while granting licences to new entities," it said. The RBI recently granted licences to two entities —IDFC Ltd and Bandhan Financial Services — to promote banks. One of the major changes in the current guidelines from the earlier one of 2001 is that large industrial houses can apply for banking licence.
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