Banking licence for conglomerates not on cards, says RBI Guv Sanjay Malhotra
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'No proposal to review promoters' voting rights'
Mumbai: The Reserve Bank of India (RBI) Governor, Sanjay Malhotra, Friday said giving banking licences to conglomerates came with palpable conflict-of-interest risks involving depositors' funds.He also said ensuring price stability remained the central bank's prime objective."We have our concerns. Some of these NBFCs will have deep pockets," Malhotra said at a media event in Mumbai."But if the same group, a large industrial house or a corporate group, is doing financial activities and real economy activities within the same group, there is an inherent conflict of interest with the group actually dealing with the money of the depositors. And, so, those concerns are valid, and they continue to remain."Malhotra clarified that the banking regulator does not have any proposal to allow a corporate entity, whether through an NBFC or as an individual company, to get a banking licence. Reliance Industries , India's biggest company by market value, and Bharti Airtel , which runs the country's second-largest telecom company, operate in the banking space with their respective payments banks. This category of lenders is not allowed to lend but can accept deposits of up to Rs 2 lakh.The Hinduja Group, with interests in industries as diverse as the capital markets and commercial automobiles, is the promoter of IndusInd Bank Malhotra said that there is no proposal to review promoters' voting rights at private banks, currently capped at 26%. He said that such a requirement ensures that no individual person exercises undue control over the management of a bank, which is dealing with depositors' money.'It is the diversification of ownership so that there are checks and balances within the owners, which we feel is necessary. And so, there is no proposal to review this 26% cap,' Malhotra said.
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