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Swadeshi Jagaran Manch, the economic wing of Rashtriya Swayamsevak Sangh (RSS), wants the newly-appointed RBI Governor Shaktikanta Das to do a rethink on the regulatory framework for private bank ownership.
Asserting that the ownership of banks in India should stay with Indians, SJM said on Thursday that it does not want Indian home-grown banks to go to foreign players.
“Currently, foreign ownership in private banks is allowed to go up to 74 per cent. In some private banks, FIIs have already reached almost 74 per cent. We want the RBI to now bring the foreign cap to below 51 per cent and ensure only Indian control of private banks,” SJM national co-convenor, Ashwani Mahajan, told BusinessLine .
Mahajan said the new RBI Governor must review the ownership and control policy for banks, and create an environment that motivates high-quality Indian entrepreneurs to come forward and build great banks.
Along with this, the RBI Governor must try and develop an understanding on the implementation risk of Basel III norms in the present context and IFRS challenge, the SJM co-convenor added.
The suggestion to rethink ownership framework for private banks comes a day before the new RBI Governor Shaktikanta Das chairs his first board meeting as central bank Governor in Mumbai on Friday.
SJM also said that the present guidelines for the compulsory dilution of equity by promoters of private sector banks “appear unnatural”.
Initial research shows that this is helping more foreign funds to make way into the Indian market. “This is worrisome,” said an SJM official.
With India not having mature institutions / funds with deeper pockets to take up equities in large proportions in banks, the forced equity dilution norms is pushing banks to go abroad, according to the SJM. The SJM also urged the RBI to rethink on its current stance of stipulating capital norms higher than those prescribed under Basel III. “At present, making it even more stringent than the global norms is uncalled for,” said Mahajan.
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