Around two dozen corporate houses and business enterprises have been waiting for more than six months for RBI permission to start their own banks.
The Reserve Bank of India has, in turn, approached the Election Commission to permit it to issue them banking licence.
Terming the RBI’s move “unfair” as the Lok Sabha elections were round the corner, All India Bank Employees’ Association general secretary C.H. Venkatachalam said allowing the private sector to open banks would lead to “profiteering.” There were chances of the corporate and business houses diverting public money to run their ventures without let or hindrance.
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“Any industry house with Rs. 500 crore can open a bank. Thereafter, they would become the absolute owner and can have access to huge cash deposits from the public. The funds can be transferred between the bank and their firms swiftly. Accounts can be fudged easily,” he said.
Recalling that most of the banks, before nationalisation, had been owned by industrial or business houses, Mr. Venkatachalam said “mismanagement and abuse of people’s money” resulted in the government takeover in 1969.
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On Monday, the AIBEA sent a letter to Chief Election Commissioner V.S. Sampath, asking him not to approve the move as it would result in conflict of interest. Besides, banking institutions could not be left to corporate whims.