IMF says India shouldn’t rush to give banking licences to conglomerates

New Delhi/Washington: The International Monetary Fund (IMF) has cautioned the Indian government against any hasty move to grant banking licences to industrial conglomerates and said the country needs to improve its financial system supervision and crisis preparedness.

IMF’s Financial System Stability Assessment Update said that it would be prudent for India to first put in place and gain sufficient experience in implementing a comprehensive framework for this purpose before considering whether to allow the entry of conglomerates into commercial banking.

“The legal, operational and regulatory framework for consolidated supervision of both bank-led groups and financial conglomerates is still missing some important elements,” it said, adding that the risks currently outweigh the benefits in this case.

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