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BSP MP from Ambedkar Nagar, Ritesh Pandey, talks to The Indian Express on why he raised the question of private entities in banking sector in the Lok Sabha.
What was the issue?
The RBI’s internal committee has recommended that corporate houses be allowed to get into banking. There is a huge conflict of interest if it is allowed.
Why do you think so?
The very corporate houses that take huge amounts of loans are going to set up their own banks. With businesses in place that pick up money from the market, you are basically promoting crony capitalism in a whole different way.
You don’t think proper checks and balance can be put in place with the benefit of hindsight in the banking sector?
There is no benefit of hindsight when it comes to greed and you have simple examples of Iceland, examples of the subprime crisis. As you started deregulating, these very bankers were easily manipulated with better hikes, better kickbacks .
But how can you say that is what is going to happen in India as well?
Look at Yes Bank. They didn’t have any private business, as far as I know. But even they took kickbacks and liberally doled out loans to people. It was people’s money, now to say that the government became wiser after that… Now look at it from the other way: The corporate houses which had to go to the banks, where a sarkaari official had to decide whether to approve the loan or not, he is accountable to someone… so there is a huge conflict of interest if a corporate house now gets to have its own bank. If you see, Raghuram Rajan has also said this, why suddenly now? What is the need? India already has very high NPS. Yes, point taken that more and more people in India need to be included in the banking sector etc. But instead of tightening the regulation, you are essentially saying we will allow more corporates to open banks.
Were you satisfied with the reply?
The minister (Anurag Thakur) said no such decision has been taken yet, but I think yeh ho jaayega (this will happen).
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