This would be a new experiment in India after nationalization of commercial banks in 1969. The RBI’s regulatory and supervisory effectiveness will be tested in preventing the new banks promoted by industrial and business houses from self-dealing.
The new bank guidelines have adequate arrangements for ring-fencing of the financial services activities of the Promoter Groups from their non-financial (manufacturing/trading/others) activities and addressed the issues concerning conflict of interests by prohibiting lending to and investments in Promoter Group entities.