“For me, in a country like India, it is too risky to allow corporate houses to own banks. I believe that a bank or bank ownership license in the hands of corporates is not a desirable thing.
“We should have well-owned and professionally managed banks,” he said in a webinar organized by SPJIMR’s Center for Financial Studies (CFS) in Bhavan.
He was discussing his recently released memoir ‘The Custodian of Trust’.
Last year, an Internal Working Group (IWG) of the Reserve Bank of India (RBI) had recommended allowing large corporates/industrial houses as promoters of banks.
However, it said that large corporates should be allowed to own banks only after making necessary amendments. banking Regulations Act, 1949 to prevent linked lending and exposure between banks and other financial and non-financial group entities.
Kumar said that even at a time when corporates do not own banks, there have been many such cases involving connected or related party transactions and over-exposure.
When asked whether NBFC-owned industry houses should be allowed to become full-fledged banks, he said one of the reasons in favor of these entities is that they are well governed, but the issue of related party transactions still remains. have remained.
Speaking on the issue of ‘telephone banking’, Kumar said that he has never faced a situation where a senior minister has called him for any loan sanction.
“In three years (as SBI chairman), I haven’t faced a situation where the finance minister calls me and asks me to do something for which I have to say no,” Kumar said.
On the power sector, Kumar said the country brought in public-private partnerships in the transmission segment, but the distribution sector, overall, is still state-run.
He said there are huge issues around ATC (total technical and commercial) losses, and the power industry ends up paying more due to power theft and subsidies.
“We are in such a complicated situation that we are unable to solve this puzzle. There is a huge mess around electricity pricing and unless we are able to fix them, which is not easy, the power sector will never be healthy. It will happen,” he mentioned.