I havent read the entire 100-pg report, but wud be very scared if conglomerates are given bank licences. The examples of Yes Bk, DHFL, PMC, LVB show crony lending is all pervading even when big business was NOT allowed in banking & no sharehldr cud hold more than 5% eq in a bank
2. We need a debate on whether payment banks shud be allowed to become small fin banks. When payment bank licences were given in 2015 to corp houses, RBI said these won’t be made SFBs or univ banks. The working Grp is now allowing big biz to enter banking via payment bank route.
3.The working group’s report recognises that connected lending should be disallowed. But can RBI monitor this? Yes Bank & LVB both showed signs that promoter/shareholders influenced lending decisions. This even when corporates aren’t allowed in banking. Imagine when they are!

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More from @latha_venkatesh

12 Oct
Govt announces a Leave Travel Encashment Scheme & Festival Advance Scheme for govt employees to boost consumption
The fare (for roundtrip to home & back) to be tax free, provided employee spends 3 times the amount in goods that attract GST over 12%; must spend before March31 2020
If Central govt employees sue this scheme Rs 5675 cr wil be spent; if PSU employees opt for this scheme, that will mean expenditure of Rs 1900 cr; and if state govt employees too opt, a further Rs 19,000 cr of money may be expended
Read 9 tweets
8 Aug
New RBI regimen on opening of current accounts & cash-credit accts by companies likely to benefit corporate lenders like SBI, BOB, PNB, Canara; may take away curr acct float from banks like HDFC, ICICI, Axis which have good cash Mgmt products, but don’t lend to mid-corproates.1/7
Hereafter Banks can’t open current account for borrowers who have cash credit account with any other bank.
If borrowers don’t have any cash-credit account with any bank, they fall under 3 groups:
1. For those with under-5cr loans from banks: banks can open curr Acct 2/7
2. For Borrowers with 5-50 cr loans from banking system, only lending banks may open curr Acct., non lending banks may only open collection accts ie these accounts can receive money which have to be paid into the cash-credit Acct.3/7
Read 7 tweets

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