Banks will have more money when people have more. Only natural.

An Internal Working Group (IWG) formed by the Reserve Bank (RBI) released a paper recommending changes to the banking sector with a view to increasing the number of banks in India. The idea being that more banks mean more money which will mean more lending to businesses and more jobs, thus making India a wealthy nation. It does not say where the more money is going to come from seeing that "78% of the adult population have personal wealth below $10,000 or about Rs 7,30,000" according to the Credit Suisse report on global health in 2019. Non-banking financial companies (NBFC) and payment banks will be allowed to apply for banking licenses, but what generated the maximum controversy was the proposal that large businesses will be allowed to open banks. "The problem with banks owned by corporate houses is that they tend to engage in connected lending," wrote Acharya, Kelkar and Subramanian. "This can lead to three main adverse outcomes: Over-financing of risky activities; encouraging inefficiency by delaying or prolonging exit; and entrenching dominance." "Unfortunately, even if one were to be more charitable, the unmistakable feeling one gets from a careful reading of the report is that even as it urges reversal of the established practice of keeping banking out of bounds of corporate houses, it fails to give any convincing reasons why," puzzled Mythili Bhusnurmath. "Even more puzzling is that the recommendation makes the cut even though the report admits the 'prevailing corporate governance culture in corporate houses is not up to the international standard'." Profs Raghuram Rajan and Viral Acharya wondered, "How can the bank make good loans when it is owned by the borrower?" "Currently, India's banking system  as a percentage of gross domestic product (GDP) is just 70%," defended banker KV Kamath. "The only other large nation with rapid growth is China, which has a figure of 170%." "So, by China's benchmark, banking in India must become eight times its current size in the span of a decade." China's GDP is nearly 5 times that of India at over $14 trillion while India's is less than $3 trillion. China's foreign exchange reserve is $3,310 billion, again 5 times India's reserve of $581 billion. China's total exports are $2.49 trillion and total imports are $2.13 trillion, giving it a trade surplus of over $359 billion. In contrast, India's total exports are over $322 billion and our imports are $618 billion, giving us a trade deficit of just under $300 billion. While China's wealth is increasing, ours is leaking out to other countries. It's only natural that China's banks have more money. Kamath is putting cart before horse. First make citizens rich. Banks will be bursting with money.