Finance Ministry wants RBI to allow realty, broking firms to set up banks

NEW DELHI, JAN 20: 

The Finance Ministry has expressed the view that the Reserve Bank should allow real estate companies and broking firms to set up banks as adequate safeguards will be there to prevent exposure of promoters to related entities.

In its comments to the RBI on new bank licences, the ministry has said that such entities can be allowed, but there should be a complete ban on taking exposure in the group companies or entities related to promoters, sources said.

Even the vendor and large customers of such promoters can’t get loan from the new bank, sources said, adding that this move will minimise accumulation of risk.

So, the firewall has been proposed to avoid undue influence of bank CEO to lend to the group companies, they added.

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