Reserve Bank of India has started issuing Banking licences to the foreign banks and corporate houses to start operating banking operations in the country but former IMF chief economist and honorary advisor to PM, Mr. Raghuram Rajan has opposed the idea.
"I think the old RBI policy of not allowing corporates banking licence was good one. I still stand by that. Whether it will continue with this or not is a different question," he said.
He stressed on giving preference to the NFBCs and MFIs over corporate houses. He said "If corporates are given licence, the regulator needs to ensure there is no inter-company lending, proper risk management processes are followed and there is enough transparency."
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