View: New ‘capital-based’ licensing regime for private banks can be real private-public...

View: New ‘capital-based’ licensing regime for private banks can be real private-public partnership

18
0
SHARE


Finally, more private banking will make shareholder and depositor discipline more imperative.

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

  • GIFT ARTICLE
  • FONT SIZE
  • SAVE
  • COMMENT

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?

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



Source link

LEAVE A REPLY