Congress, CPI oppose proposal to give banking licences to corporates

New Delhi: Congress on Tuesday termed the proposal to let corporate and business houses establish banks “regressive”. The party accused the Modi government of pressuring RBI to make such a proposal and said it would oppose “the deeper game plan of the government”.

“The proposal, ostensibly based on a report of an RBI Internal Working Group, has the fingerprints of the Modi government written all over it. This proposal, along with some other recommendations, is part of a deeper game plan to control the banking industry. The proposal, if implemented, will completely reverse the enormous gains made in the last 50 years of retrieving the banking sector from the clutches of business houses,” said former finance minister P Chidambaram at an AICC briefing on Sunday.

“Once you allow corporate houses to enter the banking sector, what kind of choice will you make, what kind of criteria will you apply to choose? It will be political largesse, political patronage and only the politically connected corporate houses will get the licences. We know who will get the first licence,” Chidambaram said.

“Bank funds belong to the depositors who are the people of this country. As a proportion of total deposits, the equity of a bank is minuscule. The total deposits in the banking industry is of the order of `140 lakh crore. If business houses are allowed to own banks, they will, with a small equity investment, control very large amounts of the nation’s financial resources. This must not happen and Congress will strive its utmost to ensure that this will not happen,” he added.

CPI chief D Raja in a statement said: “Nationalised banks are the custodians of hard-earned savings of the common people. RBI’s proposal will jeopardise their interests and run counter to India’s economic development. Giving licence to corporate and business houses is the most retrograde step and should not be allowed.”