Why not only Transaction Fee instead of Many other taxes?

 Dear Sir,

Why not only a transaction fee instead of many other taxes?

Apropos your editorial, "Why UPI Needs Transaction Fees" (ET Aug 7), UPI in India is a grand success and has become as good as a currency in circulation, eliminating the cost of printing hard currency, its storage, distribution  maintaining currency chests, and the quality of printed currency. UPI is faster and relatively safe.   Many other countries are adopting it because of its convenience, handling and comparatively better accounting, and tracking of information regarding how and where the money moves. This helps enable the building of a huge mine of information/data, assisting policymakers from a broader perspective. UPI's very success in India is because it carries no cost perhaps the only exemption seen in the whole system of transactions. If this is also brought under some levy,  it may catch on in such a way that the levying becomes attractive over a period, building inflationary expectations and adding to the cost of living without any escape route later on. If the very thought of MDR is not nipped in the bud, it may turn out to be an inevitable source of revenue like many others already in vogue. This could introduce unhealthy practices adding to the list of worries from administrative and policy angles.  If transaction fees can replace so many other taxes including Income Tax, no doubt that would be  a very welcome and transformative change worth pursuing.      

(  this letter addressed to ET )

T.V.G Krishnan

(personal views) 

( This letter was sent to ET ).

RBI has kept the rates unchanged in tune with the Market sentiments.

 Figures indicate economy is resilient, but fact remains that challenges to the economy from Politics, economics, social and technology ( PEST) angle  remain as defiant as ever. Added to these, the projected possible failure of the monsoon and geo political uncertainties also remain as challenges to keep the inflation and inflationary expectations under control. The Cost of production which is dependent upon monetary , fiscal and administrative policies also remains high as it is , without leaving any scope for reduction in the near future. Imported inflation always remains a challenge and maintaining price stability and economic growth through monetary policy alone is not sustainable is the reality. In these circumstances, the Present Monetary policy keeping the Policy Rates unchanged and maintaining RBI's stance Neutral itself can be considered as the most accommodative policy and the MPC has done an excellent job. The need to balancing the market sentiments has also been well factored into the policy announcement. 

T V G Krishnan

(this comment appeared in Money Life in response to the Article RBI Keeps Repo Rates unchanged Aug7,2026.)

Re

RBI MPC in a Dilemma

 Dear Sir 

Apropos the Article Count _ Counterpoint (ET 3rd Aug 26), the MPC is in a Catch 22 situation to decide on the policy change on rates in the background of continuing inflation ,inflationary expectations thanks to geopolitical uncertainties, failure of monsoon prospects and visible expectations of economic growth . The need of the hour is price stability which is a gambling not only on agricultural production, marketing ,distribution and monsoon but several other factors including laxity in governance and fiscal position. Cost of living and inflation are two parallel lines and cost of production is altogether another dimension dependent upon several linkages and incentives having both tax and administrative implications.

While MPC can have control on the Financial system through monetary policy  ,the Government having control on both Fiscal and administrative policies has to do lot of manoeuvring  to ensure economic growth keeping the prices stable defying the challenges from political Social and technological dynamics seen of late due to AI invasion every where. 

T.V.Gopalakrishnan

( email( Letter addressed to ET )

 

Beyond Haircuts and Provisions: Why Indian Banking Needs a Borrower-Linked Precautionary Reserve

Nearly two decades ago, in my 2004 book Management of Non-Performing Advances in Public Sector Banks—published by the Indian Institute of Banking and Finance (IIBF) with a foreword by former Reserve Bank of India (RBI) Governor Dr. C. Rangarajan—I put forward a concept aimed at strengthening the preventive architecture of Indian banking: the Precautionary Margin Reserve (PMR).

The core idea was straightforward yet fundamental: while banks are required to maintain provisions against bad loans, borrowers who benefit from financial credit should also build a dedicated, loss-absorbing financial buffer during good times.

Today, as the banking sector reflects on the massive resolution haircuts accepted in recent years, this 20-year-old proposal deserves a fresh, objective evaluation.

The Math Behind the Resolution Dilemma

Resolving stressed assets is vital for clean balance sheets and economic dynamism. However, the sheer scale of credit sacrifices made during resolution cycles raises an unavoidable policy question. Recent compilation of data shared by the All India Bank Employees' Association (AIBEA)—derived from a reply in the Rajya Sabha—paints a stark picture:

• Admitted Dues (2021–22 to 2025–26): ₹8,48,700 crore

• Amount Realized by Banks: ₹2,41,666 crore

• Sacrifice / Haircuts Taken: ₹6,07,034 crore (~71.5%)

When banking institutions absorb haircuts of this magnitude, the ultimate financial strain trickles down to key stakeholders—depositors, taxpayers, and shareholders. Corrective mechanisms like the Insolvency and Bankruptcy Code (IBC) and debt recovery tribunals are essential, but they act after the asset has already decayed.Should Indian banking rely almost exclusively on post-facto recovery, or is it time to build stronger borrower-side preventive safeguards?

Rethinking Risk: The Precautionary Margin Reserve

The Precautionary Margin Reserve concept operates on a principle of shared risk responsibility:

1. Borrower-Side Accountability: Rather than placing the entire onus of provisioning on the lending bank, borrowers build a risk-indexed reserve proportional to their loan size, account conduct, and risk profile.

2. A Cushion for Rainy Days: In times of severe business downturns or account stress, this reserve serves as the primary line of defence to absorb financial shocks before invoking bank provisions or forcing steep resolution haircuts.

3. Dynamic Risk Pricing: Borrowers with exemplary credit history, low leverage, and strong repayment track records contribute significantly lower margins, creating a direct financial incentive for sound governance.

Adapting a 2004 Concept to a Modern Regulatory Era

The financial landscape has transformed dramatically over the past two decades. Regulatory frameworks have matured, risk architectures are more sophisticated, and frameworks like the Expected Credit Loss (ECL) model are reshaping bank provisioning. The Precautionary Margin Reserve does not need to be implemented exactly as envisioned in 2004. Instead, central bank regulators and financial planners could explore its modern feasibility through flexible mechanisms:

• Risk-Indexed Calibration: Designing reserves so they do not restrict liquidity or burden genuine, productive borrowers.

• Targeted Pilot Testing: Introducing the reserve framework initially on a trial basis for high-value corporate exposures or specific capital-intensive sectors.

• Loss-Absorption Hierarchy: Positioning the borrower reserve as an early-stage buffer before enforcement or haircut-heavy restructurings.

• Feasibility Studies: Conducting independent empirical research to analyse how borrower-held cushions impact total system-wide credit costs.

Conclusion: Protecting the Future of Indian Banking

No single policy instrument can completely eliminate non-performing assets or business failures. However, relying solely on corrective tools after defaults occur leaves the financial ecosystem vulnerable to heavy losses.

A suggestion made two decades ago may hold even greater relevance today. By blending strong recovery tools with proactive, borrower-linked preventive mechanisms, the Indian banking system can build a more resilient, equitable, and sustainable ecosystem—one that protects depositors, shareholders, and the broader economy for years to come.

Samastha Loka Sukhino Bhavanthu.

 T V G Krishnan

( personal Views) 

Earned to Live, Taxed to Death

 Apropos your editorial, "More Billionaires in Your Neighbourhood" (ET 29/7/26), it makes for an interesting and satisfying read as prosperity is increasing all around. However, a broader tax net, coupled with faster real wage growth, is a realistic position and the need of the hour amid widening inequality daily, fleecing inflation and an unbearable cost of living due to an all-around price increase, figuratively speaking, from salt to camphor. Progress of IT administration is admirable but the spirit behind the tax reforms—to make them more rational and sensible, keeping the intent in letter and spirit as intended by the Budgetary policies and the FM's recent remarks—does not appear visible in the practice of not refunding the eligible refunds. Instead, refunds are being adjusted against tax demands previously raised even a decade ago and kept in abeyance without resolving them based on their merits, the genuine reasons presented to the department, or ignoring the department's own policy regarding not reopening cases pending beyond a certain prescribed period, and disregarding the honesty and integrity of taxpayers based on past records. Making tax compliance friendlier, simpler, and more equitable—and, above all, collecting taxes at source without requiring returns up to a cutoff point, if possible—makes more sense and is more pragmatic given the voluminous growth in transactions and earnings spread through enhanced digital payments, and the vast employment of people enjoying the trickle-down effect of income distribution from more millionaires and billionaires. It is time to re-examine the filing of returns if income consists only of salary, pension and interest from deposits.   

 

T.V. G Krishnan

Bengaluru .

(Personal Views). 

( A modified version of this letter appeared in ET july 30,2026)

Towards a Time-Conscious India. Time Consciousness as a Dimension of Human Development

 

Towards a Time-Conscious India. Time Consciousness as a Dimension of Human Development

THE CULTURE OF WASTING OTHER PEOPLE'S TIME is due to lack of awareness of the importance and value of Time.  Respect Time, Respect People, Respect Responsibility, Respect the Nation.

Time: Nature's Eternal Gift and Humanity's Measure

Time has neither a beginning nor an ending. It is an eternal dimension of Nature and of the universe within which all living beings exist and all activities take place. Human beings do not create time; we merely observe its continuous flow, understand its rhythms, and organise our lives within it.

The movements of the Earth, the Sun and the Moon enabled humanity to develop systems for measuring time. The Earth's rotation gives us the cycle of day and night, its revolution around the Sun gives us the year, and the Moon's phases contributed to the development of the days, month and the calendar. From these natural cycles emerged the hours, minutes and seconds by which we coordinate our activities.

Time itself is continuous; clocks and calendars are human methods of measuring it. Nature functions through rhythms, cycles and laws, and human beings, as part of Nature, must learn to live and act in harmony with them.

The greatest lesson is simple: we cannot control the passage of time, but we can choose how wisely we use the time available to us.

Human life, unlike time itself, is finite. That is why the responsible use of time is essential to individual welfare, institutional efficiency, economic development and the welfare of society.

The Hidden Cost of Wasting Time

The problem of wasted time in India cannot be attributed only to government offices or public administration. It is equally visible in the private sector and, perhaps more significantly, in everyday commercial and professional life.

Banks, insurance companies, hospitals, diagnostic centres, departmental stores, automobile service centres, hotels, restaurants and numerous other service establishments often require customers to spend considerable time waiting for services that could be delivered more efficiently through better organisation.

A patient may have a hospital appointment but still wait for hours. A bank customer may visit for a simple transaction but spend considerable time in queues or moving from one counter to another. An insurance claim may require repeated visits and unnecessary documentation. A vehicle owner may wait at a service centre because of poor scheduling. Even restaurants and hotels, where customers are paying specifically for a service, may not always give sufficient importance to punctuality and timely delivery.

These are not merely matters of inconvenience. They reflect a failure to recognise the economic and human value of time.

The problem is not confined to poorly organised institutions. Even among highly educated, professionally qualified and technically competent people, there is often inadequate sensitivity to the time of others. We may be extremely careful about protecting our own time while remaining casual about wasting someone else's.

A meeting begins late because a senior person has not arrived. An appointment is given for a particular time, but the customer is left waiting without explanation. A promised service is delayed without communication. A simple decision requires several rounds of discussion. A customer is transferred from one employee to another because no one takes ownership of the problem.

Each incident may appear insignificant. But when multiplied across millions of transactions every day, the collective loss becomes enormous.

The Value of a Customer's Time

Every customer who enters a bank, hospital, insurance office, restaurant or service centre carries with them a limited and non-renewable resource: time.

When an organisation wastes that time unnecessarily, it imposes a hidden cost on the customer. A professional waiting two hours at a hospital may lose productive work. A businessperson delayed by a bank transaction may miss an opportunity. A family waiting for a delayed service may lose valuable personal time. An elderly person standing in a queue may experience physical hardship that cannot be measured merely in minutes.

The real cost of waiting is therefore not simply the number of hours lost. It includes the value of what could have been done during those hours.

Customer service should consequently be judged not only by whether a service was eventually delivered, but also by how much unnecessary time the customer had to sacrifice to receive it.

Time as a Measure of Service Quality

Perhaps the time has come for organisations to introduce Time-Based Service Standards.

Every service institution should be able to measure:

• How long does a customer normally wait?
• How long does a transaction take?
• How often are appointments delayed?
• How many times must a customer return for the same matter?
• How many processes involve unnecessary repetition?
• How much time is lost because departments fail to coordinate?
• How quickly are complaints resolved?

These could become measurable indicators of organisational efficiency and service quality.

A bank that completes a transaction in ten minutes should be distinguished from one that routinely takes an hour. A hospital that respects appointment schedules should be recognised differently from one where patients routinely wait for several hours. An insurance company that settles genuine claims efficiently should receive recognition for its service standards. A restaurant that promises a particular delivery time should make a reasonable effort to honour that commitment.

Time could become an important component of a broader Quality of Service Index.

Respect for Time as Professional Responsibility

Respect for time is also a matter of professional ethics.

When a doctor unnecessarily delays a patient, a lawyer repeatedly postpones a meeting, a consultant delays a report, a manager keeps employees waiting, or a service provider fails to honour a commitment, the issue is not merely poor time management. It reflects a failure to recognise the value of another person's life.

Every human being receives the same twenty-four hours in a day—the rich and the poor, the powerful and the powerless, the employer and the employee, the professional and the customer. What differs is how those hours are used and what consequences arise when they are lost.

A culture that casually wastes the time of others is ultimately wasting the collective potential of society.

From Time Management to Time Respect

India may therefore need to move beyond the conventional concept of time management.

Time management generally refers to managing one's own time efficiently. What society needs is something broader: time respect.

Time respect means recognising that every person's time has value. It means arriving when promised, keeping appointments, avoiding unnecessary queues, designing efficient systems, completing projects within reasonable deadlines, responding promptly to customers and ensuring that citizens are not repeatedly required to visit an office for a task that could be completed in one visit.

It means understanding that every unnecessary delay imposes a cost on someone.

Such a cultural transformation cannot be created merely through laws and regulations. It requires awareness, leadership, education and personal example.

The most important realisation is this:

When we waste another person's time, we are not merely wasting minutes. We are consuming a non-renewable portion of that person's life.

A nation that learns to respect time will inevitably become more productive, disciplined, competitive and humane.

Time Consciousness: A Way of Life

Time consciousness should become an integral part of individual life and institutional functioning.

Time has equal value for the rich and the poor. Yet the consequences of losing it may not be equal. While no individual or institution can eliminate every delay or achieve perfect time management, no one should knowingly waste another person's time without reason or accountability.

Time is not merely a measure used to schedule daily activities. It is a fundamental resource within which every human, economic and social activity takes place.

It is:

• a factor of production;
• a factor of service;
• a determinant of productivity and efficiency;
• an influence on the quality and cost of living; and
• a resource that cannot be stored, recovered or recreated once lost.

The value of time and the consequences of wasting it should therefore become part of our educational system. Children should be introduced to time consciousness at an early age. As they progress through school, higher education and professional training, they should learn that punctuality is not merely a personal virtue—it is respect for another person's time. They should understand that efficiency is not only about saving money but also about saving people's valuable hours, and that delays carry real opportunity costs.This understanding should continue throughout life. Workplaces, professional institutions, government departments, businesses, hospitals, banks, educational institutions and social organisations should all develop a culture in which time is consciously respected.

The Objective: Eliminate Avoidable Waste

India is a vast country with enormous diversity in geography, population, economic conditions, infrastructure and social circumstances. Delays and difficulties cannot be eliminated completely. Perfect time management may be impossible. But time consciousness is possible.Continuous improvement is possible. Greater efficiency is possible. Honesty, transparency, sincerity and accountability are possible.When these values are combined with better planning, technology, infrastructure and institutional discipline, India can achieve a progressively higher level of efficiency.The objective, therefore, should not be perfection. It should be the elimination of avoidable waste of time.

Every unnecessary queue reduced is a gain.

Every unnecessary journey avoided is a gain.

Every administrative procedure simplified is a gain.

Every project completed on schedule is a gain.

Every hour saved for a daily-wage worker is a gain.

Every delay prevented in a hospital is a gain.

Every minute saved for a citizen is a gain.

Every day saved in completing a public project is a gain for the nation.

These gains may appear small individually, but collectively they can create enormous economic and social value.

Time Consciousness as a Dimension of Human Development

Time management, at the individual level, is ultimately self-management. No person can manage time itself. Time moves continuously and impartially, whether we use it wisely or waste it. What we can manage is ourselves—our thoughts, priorities, actions, habits and responses within the time available to us.The concept of time should therefore perhaps be imbibed as an integral part of human consciousness.The body enables us to act. The mind enables us to think and feel. The intellect enables us to discriminate and decide.

Time consciousness enables us to understand when and how those actions, thoughts and decisions should be undertaken. This does not mean living under constant pressure of the clock. It means developing an awareness of timeliness, sequence, priority, opportunity and responsibility.Children should be taught not merely to "save time" but to respect time—their own time and that of others. In institutions, time consciousness can promote punctuality, efficiency, accountability and respect for public resources. In economic life, it can improve productivity and reduce the enormous social cost of delays and inefficiency.

The clock measures the passage of time. The calendar records its cycles. But human consciousness gives time its practical value through the way we live and act within it.Perhaps, therefore, time consciousness should be recognised as an essential dimension of human development, alongside physical health, emotional maturity, intellectual ability and moral responsibility.

Towards a Time-Conscious India

India's future requires not merely better time-management techniques but a deeper Time Consciousness Movement—a cultural transformation in which individuals and institutions instinctively understand that time has value and that its responsible use is a collective responsibility.

The question we should ask is not merely:

"How much money will this save?"

We should also ask:

"How much time will this save for another human being?"

That question, if asked sincerely and consistently, could transform governance, business, public services and everyday life.

The ultimate objective is simple: to create a society in which people do not casually waste the time of others.

Time does not belong to us. We belong to time—and to the eternal flow of Nature.

A Time-Conscious India will not be a society obsessed with the clock. It will be a society that understands the value of human life, respects the time of others, uses resources responsibly and strives continuously for greater efficiency, productivity and human dignity. To quote swami Sivananda Saraswati  "Life is a link in the Chain of time. If you  waste time, You waste Life. Time is most precious. Trifle not with time."  S

                  Samastha Loka Sukhino Bhavanthu.

T V G Krishnan

( Personal Views)

A Vision for Kerala's Economic Transformation

 A Vision for Kerala's Economic Transformation

Developing  Kochi as an International Financial and Forex Trade Hub under the auspices of RBI.

Introduction

India's aspiration to become a developed nation by 2047 requires the emergence of globally competitive regional financial centres that complement the country's expanding role in international trade and finance. Kerala, blessed with strategic geographical advantages, a highly educated workforce, a globally connected diaspora, world-class ports and airports, and a long history of maritime commerce, possesses all the essential ingredients to become one such centre. A practical first step would be the establishment of a "Kerala International Economic and Financial Development Council", chaired by the Chief Minister with representation from the Reserve Bank of India, the Union and State Governments, financial institutions, ports, industry, academia and the overseas Indian community. Such a Council could prepare and implement a long-term strategy for transforming Kerala into India's leading maritime, financial and knowledge economy by 2047. Kerala with all its resources, talents , and potentials capable of reaching any levels of competence in any field cannot and should not lag behind any other state of India in making India the Great and achieving its Vision Of Viksit Bharath early.

The commissioning of the Vizhinjam International Seaport presents a historic opportunity to create a new economic architecture for Kerala. While Vizhinjam can evolve into India's premier maritime gateway, Kochi can emerge as the State's international financial, foreign exchange and trade gateway under the leadership of the Reserve Bank of India. Together, these two growth engines can transform Kerala into a globally competitive maritime, financial and knowledge economy while contributing significantly to India's Vision of Viksit Bharat 2047.

Kerala's Competitive Advantages:

• Commissioning of Vizhinjam Port.
• India's expanding global economic role.
• Rapid growth of digital finance.
• Kerala's educated workforce and global diaspora.

Kerala combines a highly educated workforce, one of the world's largest overseas Indian communities, substantial annual remittance inflows, excellent maritime connectivity, modern logistics infrastructure, internationally recognised healthcare and tourism sectors, and strong human development indicators. Few regions possess such a unique combination of human capital, global connectivity and quality of life, providing a natural foundation for the emergence of an international financial and trade centre.

Vizhinjam can emerge as India's premier maritime gateway, while Kochi can evolve into the financial and commercial gateway of Kerala. Together, they can attract investments, facilitate international trade, strengthen logistics and create high-quality employment across the State.

 

Kochi: Kerala's International Financial and Trade Gateway to Arabian Sea

• Gulf economies
• Largest NRI base
• Existing banking ecosystem
• Cochin Port
• International Airport
• IT parks
• Growing startup ecosystem
• High literacy
• Stable social environment
• Availability of skilled professionals

Strategic Priorities

1. International Financial Services

• Foreign exchange markets
• International banking
• Treasury operations
• Trade finance
• Risk management
• Cross-border payments
• Offshore banking services

2. NRI Financial Ecosystem

• Global NRI Investment Centre
• Wealth Management
• Diaspora Bonds
• Remittance Innovation
• Venture Capital
• Start-up financing

3. Trade and Maritime Finance

• Export finance
• Shipping finance
• Marine insurance
• Port logistics
• Commodity trading
• International Trade Promotion Centre

4. Knowledge and Innovation

• FinTech
• Artificial Intelligence
• Digital Finance
• Blockchain
• Cyber Security
• Global Trade Research
• International Institute of Finance, Maritime Economics and Global Trade

5. Global Lessons to realise, understand, appreciate  and pursue.

• Singapore – integrated port, finance and logistics.
• Dubai – international trade supported by world-class infrastructure and business-friendly regulation.
• Hong Kong – gateway between domestic and global capital.
• Rotterdam – seamless integration of port operations, logistics and finance.

6. Knowledge economies are built on universities.

Kerala's universities, management institutions and technology centres can become partners in creating specialised programmes in international finance, maritime economics, logistics, FinTech, Artificial Intelligence and global trade. Even RBI can have a Chair in Cochin University to give a boost to knowledge Centre.

7. Governance Reforms

• Single Window Digital Platform
• Predictable regulatory environment
• Ease of Doing Business
• Fast dispute resolution
• Contract enforcement
• Transparent taxation
• Stable policy framework
• Public-private partnerships

8. Sustainable and Inclusive Development

• Green Finance
• Blue Economy
• Climate Finance
• ESG Investing
• Renewable Energy
• Circular Economy
• Sustainable Tourism

Kerala has a comparative advantage here. The proposed ecosystem can generate high-value employment for finance professionals, engineers, data scientists, lawyers, logistics specialists, researchers and entrepreneurs, while creating opportunities that encourage talented young Keralites to build careers within the State.

9. Expected Outcomes

• Multiply  exports by 2035.
• Position Kochi among Asia's leading regional financial centres by 2047.
• Generate  high-quality jobs.
• Increase Kerala's share in India's exports.
• Become India's leading NRI financial services hub.
• Develop South India's largest FinTech ecosystem.
• Enhance India's foreign exchange earnings.
• Strengthen financial inclusion and innovation.

The Reserve Bank of India, through its Kochi office, could progressively facilitate the development of a regional ecosystem for international banking, foreign exchange operations, trade finance, financial innovation and regulatory excellence, while continuing to discharge its core central banking responsibilities. Such an initiative can become a catalyst for accelerating Kerala's economic transformation while contributing to India's growing role in the global financial system. Kochi can serve not only Kerala but the entire southern region of India in international banking, trade finance, foreign exchange, maritime finance, and NRI financial services. This broader perspective aligns the proposal more closely with national priorities and is likely to receive greater attention from policymakers. Kochi enjoys an exceptional regional connectivity. Its proximity to Coimbatore, the ports of Tuticorin and Mangalore, extensive road and rail networks, an international airport and strong tourism appeal position it naturally as a gateway for trade, finance and commerce across southern India. Combined with Kerala's cultural heritage, healthcare excellence and tourism potential, Kochi can evolve into a vibrant centre for business, investment and international engagement.

Conclusion

By combining visionary leadership, sound institutions, efficient governance and sustained public-private partnership, Kerala can transform itself into a globally respected centre of finance, maritime commerce, innovation and sustainable development. This vision calls for long-term thinking, institutional coordination and sustained implementation. Kerala possesses the human capital, global connections and strategic location needed to realise this opportunity. The time has come to convert these enduring strengths into a globally competitive economic future. Such a transformation would not only fulfil the aspirations of the people of Kerala but also contribute meaningfully to India's journey towards Viksit Bharat 2047. In doing so, Kerala can truly become not only God's Own Country in its natural beauty, but also a globally admired model of prosperity, opportunity, good governance and quality of life.

Samastha Loka sukhino Bhavanthu

TVG Krishnan

(personal Views).