Easier entry of foreign banks in India likely to be a pipedream

RBI governor Raghuram Rajan has developed the habit of being in the news for all the right reasons. In a recent announcement, he said that the central bank would unveil new norms for entry offoreign banks in the country which would also allow for takeover of local banks. Naturally, small and mid-sized banks started moving higher on the news. 

However, it is too early to celebrate as allowing foreign banks to acquire Indian banks is difficult if not an impossible task. Apart from the politics involved behind it, the trade unions and the aggressive nature of operations will be a big hindrance.The case of Dhanalaxmi Bank is a case in point, where an aggressive new management could not adjust with the conservative middle management and trade unions.  Selling public sector banks is out of question as it would require legislative changes. No government, especially the current one, would like to commit to a cause which brings it in confrontation with the strong banking unions. 

Read More >> Click here