Ownership and governance of private sector banks: Part II

Why has the RBI Internal Working Group (IWG) made the controversial proposal to allow corporate/industrial groups to own banks? It is suggested that the credit-GDP ratio in India is too low at around 50 per cent, which is lower than in many other emerging markets, thereby providing evidence that India is underbanked. This proposition is commonplace in India. But it is worth examining if this is really true. The comparison made of the Indian credit-GDP ratio is almost always made relative to countries that have much higher per capita incomes, which includes most Southeast Asian and East A.....

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