The Swadeshi Jagran Manch (SJM) Thursday organised a discussion on 'Future of Banks in India', which was moderated by its co-convener Ashwani Mahajan.
Days after new RBI governor Shaktikanta Das assumed charge, an RSS-affiliated outfit Thursday said he should “rethink” about the regulatory framework for private bank ownership in the country, so that it remains in Indian hands. The Swadeshi Jagran Manch (SJM) Thursday organised a discussion on ‘Future of Banks in India’, which was moderated by its co-convener Ashwani Mahajan.
After the discussion a paper was released, in which the SJM said, “There is a need for the new RBI Governor to rethink the regulatory framework for private bank ownership. None of us want India home grown banks be allowed in the hands of foreign players.”
These remarks come just two days after Das was appointed as the Central bank governor and a day ahead of RBI’s central board meet in Mumbai.
The Sangh affiliate further suggested that the promoters cap should also be reexamined, adding “present guidelines for compulsory dilution of the equity appear unnatural” as it is helping more foreign funds to make way into the Indian markets. “SJM is worried that the foreign funds are increasing their penetration among the public sector banks as well as taking control of various private banks. In absence of any agreements on this at multilaterals, including the World Trade Organisation (WTO). SJM believes that the ownership of banks in India should stay among Indians,” the paper said.
It is worrisome, as India doesn’t have mature funds with deeper pockets to take up equities in the banks, the forced equity dilution pushes the banks to go abroad, SJM said while underlining that the motive of bringing in private sector banks in 2001 was to bring in more competition in this space and improving the access to credit to more Indians.
Asserting that the country needs strong and healthy banks for inclusiveness in the society, the SJM said there are two main disruptors for banks, the implementation of International Financial Reporting System (IFRS) based accounting standards and BASEL-III norms.
Basel III capital regulations are a global capital to risk norms. As per the norms, banks have to maintain a minimum common equity ratio of 8 per cent and total capital ratio of 11.5 per cent.