The internal working group of Reserve Bank of India (RBI) has come up with a slew of recommendations around letting NBFCs above a certain size acquire a banking license, letting Payments Banks and Small Finance Banks become full-fledged banks and letting certain large corporates set up banks
In this episode, Srivatsa Subbanna hosts Nirav Kanodra (Investment Banker) and Karan Bhasin (Economist & Researcher) as they walk us through these recommendations. We start off by analysing these recommendations and what is the potential impact of these regulations. They then discuss the need for these regulations and how changes in technology will shape regulation in the coming years. They then talk about some of the challenges when it comes to letting corporates run banks and how some of these challenges can be addressed through regulation. Finally they talk about corporate owned NBFCs, how they can be converted to banks and what can we learn from other countries. Finally, they share their views on the safeguards that the RBI should set up in order to make this move a success.
This is an insightful deep dive into the structure of banking, supervisory oversight and how a credit starved nation like India should proceed towards building strong banks that work towards democratizing credit while ensuring that systemic risks are handled to ensure that depositors and small savers are protected.
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