Raghuram Rajan and Viral Acharya — two former regulators on Mint Street — have slammed the recommendation of an internal working group of the Reserve Bank of India to allow large industrial houses to run banks in India.

Terming the recommendation a “bombshell”, former RBI governor Rajan and deputy governor Viral Acharya said the banking regulator needs to tread this path with caution, especially after the near-collapse of Infrastructure Leasing and Financial Services (ILFS) and Yes Bank in the past year.

“Why now? Have we learnt something which allows us to override all the prior cautions on allowing industrial houses into banking?” the former regulators who had testy relations with the Narendra Modi government said in a joint article on professional networking site LinkedIn.

They wondered why there was a sudden urgency. Business houses with political connections would push for the banking licences, they said.