Monday, February 18, 2013

Licences for cronyism


..........The context in which these debates occur is a financial sector in which the non-banking sector (or “shadow banking”) has grown enormously and regulatory complexity has increased manifold. In banking itself, however, public sector banks continue to play a dominant role, while the regulator (the RBI) continues to have a latent conflict of interest — the regulator periodically presses banks to help the government in meeting its borrowing requirements and exercises considerable caution when banks lend to politically connected firms. The biggest concern over granting large industrial houses bank licences is the risk of conflicts of interest and ...............


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