Commercial banks by corporate houses

I would tend to differ with Mr Raghuram Rajan who has 'ripped apart' the RBI proposal to permit corporate houses to establish commercial banks

Mr Rajan may be a renowned economist and well qualified to offer his comment on the proposal. But , as a former commercial banker (practical banker), I am afraid his fears are misplaced. If proper regulations and restrictions are laid down,  while considering the proposal, which are STRICTLY implemented/enforced and the supervisory/regulatory role of RBI is played properly no corporate house will be able to play truant, i am sure. Even now each bank has its own credit policy involving caps for industry exposure, group exposure etc which acts as proper checks and balances . Role of RBI is to ensure that these covenants are properly followed. In spite of this, there have been instances where business houses have been able to siphon money from banks. So one can say that such things will happen when the stipulations are diluted on various grounds and when the regulator also turns blind eye to such dilutions.

With only one condition that the group entities should not be financed by the corporate banks , the fear expressed can be addressed, i feel. Problem is how far the management will be able to withstand the pressure and what devious methods will be invented to subvert such restrictions !