The Reserve Bank of India should think twice and adopt a well-calibrated approach towards giving banking licences to industrial houses. Before banks were nationalised in India, all major banks were controlled by reputed industrial houses. Unfortunately, commerce and banking did not get along well and most of the banks ended up with large impaired assets even with relaxed norms of identifying non-performing assets. Industrial houses in India are largely family-run businesses and the voice of the family patriarch is given free rein in the board rooms. Moreover, Indian public sector banks have done quite well in the recent past during the global recession when their American and European counterparts in the private sector were falling apart. The public sector banks in the country should be encouraged and capitalised well to take on future challenges.
B Bagchi, Assistant General Manager, SBI
Administrative Office, Bhavnagar
