Banking regulator, Reserve Bank of India has said that industry associations, banks and other sources have all given feedback that business and corporate houses having diversified and transparent shareholding should be allowed to float banks in India.

Banks are however apprehensive to the move fearing that it would lead to a lot of connected lending. Since a bulk of funds available with banks comes from corporate houses, so it would create a difficult platform for them.

RBI said that suggestions on promoter's holding ranged from 30 to 100%. Industry associations supported the cause saying that the entry of new players will create a level playing filed in the banking space.

Also the motive of financial inclusion would be better served.

The feedback said that a few industrial houses could be given license to own banks but in very restricted manner so as to see the viability of the option. Heavy penal charges and cancellation of license could be enforced in case of any violation of regulations by the new players.