Prudent regulation

Banks promoted by business houses would raise systemic risk

One of the important factors that will determine the longer-term growth trajectory of the Indian economy is the strength of the financial sector, particularly the banking system. But, as things stand today, the Indian banking system, dominated by public-sector banks with higher levels of non-performing assets, could pull down the growth potential. India needs more private-sector banks to fulfil the funding needs of the productive sectors of the economy. In this regard, the Reserve Bank of India (RBI) did well to constitute an internal working group to examine the licensing and regulatory guidelines for private banks. The group submitted its