India wants faster growth. But who funds the banks that fund the economy?

Added: 2026-05-27

[00:00:00]So, one area Neeraj will be good to get your thoughts is A on ownership of bank and B on entry of new entities as banks.

[00:00:06]Yes, so this is an area which has attracted [music] a lot of debate in this country for a long period of time.

[00:00:11]Historically, while if you go back to the pre-1949 era, banks were privately owned merchant [music] organizations, mercantilist organizations, commercial organizations. Since the onset of I would say it's the socialist era of 1960s and privatization of [music] the banks in 1960s, they became state enterprises. And then we saw a period of reforms where the ownership sort of shifted partly from state to private sector. We haven't really allowed [music] corporate sector to own banks in this country. But India has very very deterministically stayed away from that kind of structure. And part of the reason we have stayed away from that structure is that there is a perceived conflict of interest between a corporate, you know, owning a bank, whereas the [music] bank's resources can be diverted to the corporate and you can have a lot of conflict of interest situations. So, in this context, banking institutions [music] and banking organizations in India have largely been very focused financial institutions, [music] not having any other line of the business. So, one key question that has been asked repeatedly is that if we have such a narrow set of ownership restrictions of banks, and if India does require a significant amount of capital to go into banking industry, where is that capital going to come from?