Connect with billionaires, disconnect with people.

"In a significant shift of stance, large corporates and conglomerates could own banks if the suggestions of an internal working group (IWG) constituted by the Reserve Bank of India (RBI) are accepted." Also, "large, well-run non-banking finance companies (NBFCs), with an asset size of Rs 50,000 crore (Rs 500 billion) and above could become banks post 10 years of operations once they pass he due exercise". "Around half of the finance companies with assets of over Rs 50,000 crore that meet the RBI's size criteria to get a bank licence are part of corporate groups, while two are already part of banking groups." Banks are allowed to take deposits from ordinary people who will get hurt if a bank fails. If large companies own banks it may lead to 'connected lending'. "Simply put, connected lending refers to a situation where the promoter of a bank is also a borrower and, as such, it is possible for a promoter to channel the depositors' money into their own ventures," wrote Udit Misra. "Past examples of such mingling -- such as Japan's Keiretsu and Korea's Chaebol -- came unstuck during the 1998 crisis with disastrous consequences for the broader economy." It will be bad because it will lead to connected lending and give too much power to a few business houses, wrote Profs Raghuram Rajan and Viral Acharya. "Interestingly, the IWG reports in its appendix that all the experts it consulted except one 'were of the opinion that large corporate/industrial houses should not be allowed to promote a bank'. Yet it recommends change!" It's a very bad idea, wrote SA Aiyar. "Just imagine what would have happened if (Vijay) Mallya, (Nirav) Modi and (Subrata) Roy had been allowed to own banks. The would have got their self-owned banks to lend not thousands but lakhs of crores (trillions) to their own dud and crooked businesses, concentrating ever more political and financial power in a few dubious hands." This move is essential because, "Currently, India's banking system as a percentage of gross domestic product (GDP) is just 70%. The only other large nation with rapid growth is China, which has a figure of 170%," wrote banker KV Kamath. China's GDP is $14 trillion while that of India is just $2.9 trillion, and China's economy grew by 4.9% in the September quarter after shrinking by 6.8% in the first three months of the year, while our government is congratulating itself because India's GDP shrank by less-than-expected 7.5% in the September quarter after contracting by a shocking 23.9% in the first. While proposing to allow billionaires to play with our money the government is trying to withdraw whatever protection depositors have through a Financial Regulation and Deposit Insurance (FRDI) Bill. "Why has the consumption of gold gone through the roof in India?" asked Uma Shashikant. Because the rich are cronies and the poor are vote bank. The taxpaying middle class is being looted, wrote Sandipan Deb. Bank licences will make that legal.