Rahul Gandhi takes dig at Centre on banking plan for corporate houses – Times of India

NEW DELHI: Congress leader Rahul Gandhi on Tuesday took a sharp dig at the Centre on proposal to allow corporate houses to set up banks. This comes just a day after former Reserve Bank of India (RBI) governor Raghuram Rajan and ex-RBI deputy governor Viral Acharya criticised the plan and termed the central bank working group’s proposal as “bombshell”.
The former Congress president Gandhi tweeted: “Chronology samajhiye (understand the chronology): First, karz maafi for few big companies. Next, huge tax cuts for companies. Now, give people’s savings directly to banks set up by these same companies. #SuitBootkiSarkar.”

Last week, an internal working group (IWG) set up by the RBI made various recommendations, including that a large corporate may be permitted to promote banks only after necessary amendments to the Banking Regulation Act.
The IWG was set up to review extant ownership guidelines and corporate structure for Indian private sector banks.
Referring to the group’s proposal to allow Indian corporate houses into banking, an article jointly written Rajan and Acharya stated, “its most important recommendation, couched amidst a number of largely technical regulatory rationalisations, is a bombshell”.

” … it proposes to allow Indian corporate houses into banking. While the proposal is tempered with many caveats, it raises an important question: Why now?,” the article added.
They (Rajan and Acharya) noted that the rationales for not allowing industrial houses into banking are then primarily two.
“First, industrial houses need financing, and they can get it easily, with no questions asked, if they have an in-house bank. The second reason to prohibit corporate entry into banking is that it will further exacerbate the concentration of economic (and political) power in certain business houses.”
(With PTI inputs)