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Financial Holding Company Structure for India

Author

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  • Swamy, Vighneswara

Abstract

Indian banking sector is passing through another crucial phase in its evolution with the Reserve Bank of India proposing the formation of holding companies in banking groups. This paper offers an analytical discussion about the proposed financial holding company (FHC) or banking holding company (BHC) that is claimed to offer considerable advantages as the banks will be much better protected against possible adverse effects from the activities of their non-banking financial subsidiaries. The paper recommends that the financial holding company (FHC) model ought to be pursued as a preferred model for the financial sector in India. In addition, the FHC model can be extended to all large financial groups – irrespective of whether they contain a bank or not. Accordingly, there can be Banking FHCs controlling a bank and Non-banking FHCs, which do not contain a bank in the group.

Suggested Citation

  • Swamy, Vighneswara, 2012. "Financial Holding Company Structure for India," MPRA Paper 47515, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:47515
    as

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    File URL: https://mpra.ub.uni-muenchen.de/47515/1/MPRA_paper_47515.pdf
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    References listed on IDEAS

    as
    1. Freixas, Xavier & Loranth, Gyongyi & Morrison, Alan D., 2007. "Regulating financial conglomerates," Journal of Financial Intermediation, Elsevier, vol. 16(4), pages 479-514, October.
    2. Stiroh, Kevin J., 2000. "How did bank holding companies prosper in the 1990s?," Journal of Banking & Finance, Elsevier, vol. 24(11), pages 1703-1745, November.
    3. Peter G. Klein & Marc R. Saidenberg, "undated". "Diversification, Organization, and Efficiency: Evidence from Bank Holding Companies," Center for Financial Institutions Working Papers 97-27, Wharton School Center for Financial Institutions, University of Pennsylvania.
    4. Black, Fischer & Miller, Merton H & Posner, Richard A, 1978. "An Approach to the Regulation of Bank Holding Companies," The Journal of Business, University of Chicago Press, vol. 51(3), pages 379-412, July.
    5. Xavier Freixas & Gyongyi Loranth & Alan D. Morrison & Hyun Song Shin, 2004. "Regulating Financial Conglomerates," Working Paper Research 54, National Bank of Belgium.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Agata Wieczorek, 2022. "The transparency of remuneration policy in financial holding companies based on the example of the UniCredit Group," Journal of Banking Regulation, Palgrave Macmillan, vol. 23(2), pages 173-198, June.

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    More about this item

    Keywords

    Banking Risk; Diversification; Financial Holding Company; Banking Holding Company;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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