Businessmen allowed to open banks, Raghuram Rajan and Viral Acharya slam RBI

New delhi date. 24 November 2020, Tuesday

Former Reserve Bank Governor Raghuram Rajan and former Deputy Governor Viral Acharya have strongly criticized the Reserve Bank of India's decision to license large industrialists to open banks.

The proposal, which was put before members of the Reserve Bank's internal working group to allow industrialists to enter the banking center, was rejected by all but one of the members. The proposal has been approved. The two members of the group had earlier said that the debt would increase after the industrialists enter the sector and the move would prove to be dangerous.

Members of the Internal Working Group told the bank that the corporate house would buy other assets by taking out maximum loans and that would pose a risk to the banking system. Will take loans from self-made banks and the history of this type of debt has not been good.

Rajan and Acharya say that banks run by industrial houses can also come under political pressure.