Setting
up of Holding Companies
ØAt present, most of the financial groups in India are led by banks and
organised under the Bank Subsidiary model. This model, however, puts the onus
on the parent bank for corporate governance, performance and capital
requirement of the subsidiaries. Besides, the parent carries very substantial
reputational risk.
ØThe Working Group on ‘Introduction of Holding Company structure in India
for banks’ has recommended migration of major financial conglomerates to the
holding company structure to address these limitations to some extent.
ØNecessary legal amendments will have to be put in place for facilitating
such migration.
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