Bank licences to industrial houses are a serious error

India has not issued a new bank licence since 2004. There is a persuasive case to be made that India’s banking sector needs to be more open; but aspects of the recent decision to award more licences are, none the less, disquieting. Well-informed voices from across the spectrum of opinion have, in the past few days, been raised against the proposal to allow large business conglomerates to set up banks if they have a “successful track record” – judged, presumably, by the licensing authority – and a minimum capital of Rs 500 crore.

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