Synopsis
Both theory and evidence reveal that compared to real sector business units, banks are more vulnerable to contagious shocks, the impact of which is much more pervasive and pernicious. So, capital, especially equity capital, plays a crucial role of loss absorbency in banks.
The Reserve Bank of India (RBI)’s ‘Report of the Internal Working Group to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks’ (bit.ly/38ZZihs), released on November 20, emphasises ‘capital-based’ licensing of private banks. This is a move in the right direction.Both theory and evidence reveal that compared to real sector business units, banks are more vulnerable to contagious shocks, the impact of which
- FONT SIZE
AbcSmall
AbcMedium
AbcLarge
To Read the Full Story, Become an ET Prime Member
Sign in to read the full article
You’ve got this Prime Story as a Free Gift
Access the exclusive Economic Times stories, Editorial and Expert opinion
Already a Member? Sign In now
Why ?
Sharp Insight-rich, Indepth stories across 20+ sectors
-
Access the exclusive Economic Times stories, Editorial and Expert opinion
-
Clean experience with
Minimal Ads -
Comment & Engage with ET Prime community -
Exclusive invites to Virtual Events with Industry Leaders -
A trusted team of Journalists & Analysts who can best filter signal from noise
