Connected lending: Influence of business houses likely to be curbed

According to industry experts, the term 'Regulated Entities' includes not only banks but is also expected to include other lending agencies like NBFCs and Co-operative banks

The decision by the Reserve Bank of India (RBI) to introduce a unified regulatory framework on connected lending for all the regulated entities (RE) is expected to reduce the influence of business conglomerates in the Indian lending space, said bankers and experts.

“Connected lending pertains to lending to related parties within the same business group. While the RBI might appear more agreeable to allowing business conglomerates to own banking licenses, it deems it crucial to bolster regulations that would prevent conglomerate-owned banks from gaming the system,” said Shivaji Thapliyal, head of research and lead analyst, YES Securities.

The RBI, during