Mega Privatization Of Banks: RBI To Allow Ambanis, Tatas, Bajaj, Birla To Open Banks In India
The government is considering opening up the banking sector for private players by relaxing some of the rules for the participation of corporate and foreign banks in the banks that the government is looking to privatize.
Reports have suggested that RBI is planning to allow some big industrial behemoths such as the Tatas, Birlas, and their other counterparts to set up full-scale banks like HDFC and ICICI Bank.
Read on to find out all the details!
Policymakers Considering Opening Up Banking Sector For Private Players
As of now, the industrial houses that have less than 60% of their turnover from non-financial entities are not allowed to apply for bank licenses and their equity participation is also allowed for 10% only.
As per reports, the policymakers are considering modifying the existing policy.
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, fin institutions.”
Policymakers are now discussing allowing foreign banks that have Indian subsidiaries to participate in the sale of the government’s stake in Central Bank of India, Bank of India, Punjab and Sind Bank, IOB and UCO Bank.
RBI To Allow Tatas, Birlas, Ambanis, Mahindras To Set Up Their Own Banks
The Reserve Bank of India (RBI) also has plans to permit large corporations to launch full scale banks similar to private-sector lenders HDFC and ICICI Bank. Recently, the RBI had announced that corporate sector could set up payments banks for the first time.
This attracted some behemoths like the Tatas, Birlas, Ambanis, Mahindras, and a few others to obtain a differentiated banking license. Reliance Industries, Aditya Birla Nuvo, Tech Mahindra, Tata Sons, Sun Pharma were also some of the companies who applied for a similar license.
This means that there is a possibility that Tatas, Birlas, Ambanis, Mahindras might set up their own banks in the recent future. RBI’s internal working group has confirmed this news while releasing a report on the ownership guidelines and corporate structure for Indian private sector banks.
This is still a developing story and we’ll keep you informed as we get any more updates!