In an interim report on 'Banking and financial policy' prepared by AIBOC said that evidence from emerging market economies, particularly Latin America, showed that greater reliance on FDI in banking had given to rise to stunted overall credit growth with domestic banks reducing loan exposure and slow economic growth due to foreign banks acting as conduits for transmission of contagion and strategic decisions of parent banks.
The report said that if voting rights were made proportional to equity holding, as sought by both the finance ministry and RBI, then it would lead to a position where economic sovereignty of the country would be at 'peril'.
AIBOC, which had roped in former finance secretary S P Shukla, former Syndicate Bank CMD N K Thingalaya, and a few renowned economists for preparing the report, said that the public ownership of banks was implicit to the Indian banking system and demanded that this model should continue.