Right holding

The Reserve Bank of India (RBI) has done well to stick to its guns on the holding company model for the financial sector in India. An indelible lesson of the financial crisis of 2008 is the need to ring-fence the banking sector . The present model where banks act as holding companies and float subsidiaries, whether in insurance , capital markets or the pension sector, is fraught with danger. On paper, the bank's liability is limited to the extent of its shareholding in its subsidiary. 

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