While there are potential upside benefits to be derived from well capitalized banks, there are equally downside risks, especially where risk management is not given the requisite attention. The activities of banks are inherently risky and capital is not a complete panacea for risk taking.
I have been associated with the area of market regulation long enough to have mulled and struggled with different strands of the philosophy of regulation as it has evolved over the past few decades. The financial sector in India has developed over the years in the context of varying politico-economic considerations at different points of time.