“Good-looking step” in “bad direction” – RBI Internal Working Group proposal

What is it about?

This case focuses on the RBI Internal Working Group (IWG) proposal to allow Corporate Houses and Industrialists to set up Private Banks. It discusses the underlying reasons behind the proposal. The case also critically evaluates the pros and cons of adopting the proposal to allow corporates to start scheduled banks. This case presents the opinion of three eminent economists namely Kaushik Basu (Former Chief Economist of World Bank), Raghuram Rajan (Former RBI Governor) and Viral Acharya (Ex-Deputy Governor) regarding the IWG proposal. It also discusses the opinion of Shekhar Gupta (Editor-in-Chief, ThePrint) who has put forth his views and drawn upon the opinion of prominent economists of national and international stature. This case touches upon concepts such as Connected Lending and Crony Capitalism both of them being presented as the probale fallouts if the IWG proposal is implemented in full.

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