Connected licenses for connected companies.

"In a significant change 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," reported the Financial Express. "For instance, 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 the due exercise." The difference between banks and NBFCs is that banks are allowed to accept deposits from ordinary Indians and if large companies own a bank it may lead to "connected lending", wrote Udit Misra. "The recent episodes in ICICI Bank, Yes Bank, DHFL etc were all examples of connected lending. The so-called ever-greening of loans (where one loan after another is extended to enable the borrower to pay back the previous one) is often the starting point of such lending." "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'," wrote Profs Raghuram Rajan and Viral Acharya. Apart from connected lending it will concentrate power in the hands of a few very wealthy individuals who own such companies. "Two years ago, India rolled out a laudable plan to unlock the capital trapped in some of its smaller airports," wrote Andy Mukherjee. "But the actual outcome from privatization was less than reassuring: All six airfields put on the block went to one bidder. If that's not enough, multiple media reports now say that Ahmedabad, Gujarat-based billionaire Gautam Adani, an early and enthusiastic supporter of Prime Minister Narendra Modi, might also succeed in taking control of the already-privatized Mumbai airport as well as a new one coming up on the financial center's outskirts." Adani did get Mumbai. Recently, "India's stressed asset deals are starting to look cozy. Local tycoon Gautam Adani's roads-to- mining empire narrowly outbid US based Oaktree with $4 billion bid for a collapsed housing lender, but it was submitted after a deadline passed and cheekily expanded on its original plan. It's the second time in just a few months that the industrialist has blindsided foreign buyers," reported Reuters. Already, "Jio Payments Bank, a joint venture between Mukesh Ambani's (India's richest man from Gujarat) RIL and State Bank of India, has sought the Reserve Bank of India's (RBI) permission to open current account of Reliance Industries Ltd and other group companies." A current account can run huge overdrafts. "There is a premise that expanding the number of banks and a supply of credit will fix India's problem of being credit starved," wrote Monic Halan. But, "Banks are not lending because of the fear factor as the clean-up in banking is opening up past decisions on loans." So why is the RBI even contemplating such a dangerous move? Maybe because,"Throughout history, the Union government has deployed three levers to control the RBI," wrote Bhattacharya, Bhatia and Devulapalli, and the present governor is a retired civil servant. Caught in vice.