For financial institutions consolidation, rather than growth, should be the leitmotif, says S S Tarapore
The four decades from 1950-90 were the glorious days of the financial institutions (FIs). In a milieu which put a premia on developmental finance, the FIs were the favourite sons of the authorities. The FIs were provided low interest funds and the regulation/supervision by the Reserve Bank of India (RBI) was non-existent.
The year 1990 is a watershed in the history of FIs. Quite accidentally, while examining the legislative framework for the non-bank sector, the RBI discovered that it had significant powers to regulate the FIs based on the RBI