BJP questions RBI’S statement on opening up banking sector
The BJP on Monday questioned the Centre’s move to open the Indian market to foreign banks without a “proper discussion” within the country.
The BJP said the collapse of foreign banks in the US had led to the financial crisis in 2008, and allowing such banks to enter the country was akin to importing a financial crisis.
The party was reacting to RBI Governor Raghuram Rajan’s statement that a new policy of allowing big foreign banks to open branches in India would be announced in the next few weeks.
“Such a major policy change must first be discussed in the country. The RBI is not only going to open the Indian market to foreign banks but it is even contemplating allowing the foreign banks to take over small Indian banks. Such a major move should have been first debated here, taking into account the global experience,” BJP spokesperson Prakash Javadekar said.
“The decade-old experience of foreign banks in India is that they compete only with Indian banks in the creamy business segment. Their contribution as far as financial inclusion is concerned is very minimal and below the expectations.”
“The 2008 global financial crisis has raised a question mark over the viability as well the methodology adopted by foreign banks. Governments all over the world had to provide large bailout packages to these banks. Against this backdrop, India should not import a financial crisis,” he added.
Asked if his party was against the entry of foreign banks, he said the BJP was opposed to the foreign banks being given permission to open shop in the country without a “proper” debate.
Javadekar said that when the NDA was in power, a proposal was mooted to allow private companies to open banks but it was shot down over “moral hazards”.
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