Companies being considered for new banking licences in India should be asked to have systemic controls to safeguard against any contagion impact of problems in other businesses, said Uday Kotak, executive vice-chairman, Kotak Mahindra Bank.

“We welcome new banks,” said Kotak. “But the process of opening up the sector for new players has to be carefully crafted.”

Asked whether Chinese-Wall like measures would be enough to manage conflicts of interest in case of large business houses getting into banking, Kotak said: “The key issue in that debate is that we need to ask a simple question — if the water level go up, what will be the priority of the corporates — saving the corporate group or using depositor’s money in the bank?”


Kochhar upbeat on indian banks

Davos: Dismissing concerns of high corporate debt exposures posing possible default risks to banks in India, Chanda Kochhar, chief executive officer and managing director, ICICI Bank, said loans have been mostly given for projects in the investment phase and leveraging will appear high once companies start generating cash flows.

India’s financial services sector, including banking, has got tremendous growth potential for the next few years, said Kochhar, adding, there will be great opportunities in the economy.  PTI