Bank licence door may stay shut for industrial houses

As suggested by internal working group (IWG) in November 2020, Reserve Bank of India may not be in favour of issuing banking license to large industrial houses and the regulator is expected to make it releases its final report within 10 days.
The Central Bank may also not substantially move from its stated position that a non-banking financial company (NBFC) which is part of a group that has total assets of Rs 5000 crore or more and the non-financial business of the group accounts for 40per cent or more in terms of total assets and in terms of gross income it’s not eligible.
RBI however may be willing to regulate for entities that pass its muster on reserve requirements cash reserve ratio and statutory liquidity ratio and on priority sector targets.
The report was submitted on November, 2020 had weighed on pros and cons of issuing banking licenses to industrial houses. The RBI’s final report is expected to have more details of an operational nature but from a policy stance it may be a no-go as fas as issuing banking licenses to large industrial houses is considered.

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