Large corporates will never be allowed to open a bank in India, veteran banker N Vaghul has said.
Vaghul said India has learnt from its pre-bank nationalisation experience and will never repeat the same mistakes by allowing large corporations into banking.
In the last round of licensing before it was made on-tap, a slew of corporates had unsuccessfully applied for a banking license.
Two years ago, a RBI discussion paper made a case for allowing the large corporations because of their ability to get capital which will in turn fund economic growth.
That discussion led to a raft of criticism by many, including former RBI top brass, and did not move ahead.
Speaking to reporters, Vaghul suggested that the capital needed for economic growth will come from the public, which is keen to invest in a lender which is run professionally.
Industrial houses “cannot be banking”, Vaghul said, recalling the past experiences with them and how state ownership of banks became popular.
“There used to be a talk about, even in professional banking circles, that things are not alright in the banks which are owned by the industrial houses.
“I don’t think this country will have a repetition of that. It will be all professional banking,” he told reporters on the sidelines of the launch of “Reflections”, his memoirs, last Friday. PTI