Corporate houses being granted banking license is a topic which has always gathered diverse opinions from different sources. In the year 2006, the Tarapore committee headed by RBI deputy governor S S Tarapore had recommended the idea. The idea was also supported by Raghuram Rajan, the reknowned economist.
The apex bank, this time has also taken into consideration all pros and cons of the age old debatable issue before coming out with the discussion paper for granting fresh banking licenses once again.
History says India has had the experience of having banks held by corporate bodies. The experience however says that the economic power in such cases has always remained within the families and majority of the finance was used by them. Thus it is said that India has not had a very warm response to this idea.
Further more, this concept has different takes in different countries. For example, industrial houses in USA are not allowed to hold banks. On the other hand, countries like UK, Germany, Australia do not put any such barrier. They however limit the voting rights and controlling positions which can be held by any shareholder.
Japan has no restrictions in this regard. But the regulator is very strict while granting out the licenses.
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