The need to be catious on FSLRC Report Implementation

The article has highlighted the flaws of the Report very well and gives rise to the questionable efficacy that the recommendations if accepted and implemented. The very fact that four members have dissented and expressed their own views, is an indication that the recommendations if implemented will not help to bring efficiency and soundness to the financial system which has been well nurtured and made to resist to yield to any temptations unworthy of, by the Reserve Bank and other regulators. Principle based supervision will not work in this economy where principles, ethics and values have been given a go bye is a truth which no one can challenge.A lot of serious thinking is required before accepting and implementing the FSLRC report is what the article highlights with some solid examples.

Dr.T.V.Gopalakrishnan

( This comment has been published in ET in response to an article 'The FSLRC Report is flawed in its approach)

Regulation is a must

With all the regulations and supervisions,loots are on the increase in the economy and not a day passes without a scam or fraud being reported. Where is the scope for taking away regulation in the name of cost.Regulatory cost has to be brought down that does not mean that regulation itself can be abolished. It will be a dangerous move as our people are unfortunately not that honest and ethics and values have been given a go bye long back.Better to be practical and realistic.

Dr.T.V.Gopalakrishnan
( This comment appeared in ET  dated 30/3/13 in response to an Article Regulatory Impact assessment )

Attract inward remittances to meet the CAD crisis

The economy has already reached the tipping point of crisis and is comparable to that of 1991 BOP crisis except perhaps for holding some extra reserves which is more than offset by increase in external debt. The position is precarious and the only way to come out of the mess is to attract as much remittances as possible through some incentives and reduce the import bill to the maximum. The rupee has already depreciated by more than 20 % in the last couple of years and further devaluation if any will only boomerang.Time for RBI and the GOVT to shed their ego and act jointly on a war footing before the situation worsens. further.
Dr.T.V.Gopalakrishnan
( This comment is in response to man Article Govt Sins come back to haunt us that appeared in ET dated 29/03/11)

Current account Deficit beyond tolerable position.

Figure looks so scary and how The Govt and RBI will tackle the problem without hurting the common man who is already suffering under inflation and very high asset prices. The situation is worse than what was obtaining in 1991 crisis. The Fiscal deficit is equally worse and the GDP Growth and Inflation levels are also going from bad to worse. The over all position resembles that of 1991 crisis but only consolation is that our Forex reserves are some what better as compared to 1991 position.Dr.T.V.GopalakrishnanThis comment is in response to the news item Q3 FY 13 Current Account Deficit at record high of 6.7% that appeared in ET dated 28/03/11)

BRICS and their Bank

The article reads well. The need for economic cooperation among the developing economies is paramount and the idea of establishment of a bank by these economies will definitely bring the equilibrium very badly needed by them and the IMF and world bank will also shed their flat and come to senses.The capital for this bank can be based on the development Index of these nations or on the basis of population. The bank once formed can take care of the capital flows and help these nations with adequate funds for the infrastructure development.Even the Exchange rate fluctuations can be regulated to a great extent as the Bank will have sufficient reserves to control and regulate the flights of capital.

Dr.T.V.Gopalakrishnan

(This comment is in response to an Article BRIC by BRIC that appeared in ET dated 28/03/11)

Cobra Post Need for a thorough scruting

The news is not surprising.What is surprising is that this has been brought out by a private agency instead of by the regulators and law enforcing agencies.
The banking system handles and holds a lot of black money is not a secret. Our informal economy may be equal to formal economy if not more is a well known fact.The selling of Gold coins,insurance products etc in branch premises has enabled banks to cover up all illegal transactions. The new generation Private sector banks are always a challenge to the regulatory system and they are ahead of the regulators in introducing innovative products without perhaps getting them vetted by the regulators. They know very well that the system permits or tolerates aberrations and the aberrations are done on whole scale basis.It is practically impossible for the regulators to check each and every transaction that takes place in banking.Further the present inspection also does not expect to be transaction based as per the liberalised approach. Banks know the weaknesses and they are smart in violating the rules and regulations. The auditors are banks own paid employees and they cannot be expected to point out their fingers at them.On the contrary they help the banks to cover up the transactions. There is always a trade off between banks and auditors.
The only way to stop banks from indulging in money laundering activities is to ban the sale of insurance products and gold coins. Further, the regulator has to tighten its noose by increasing the number of branches taken up for inspection and improving the scrutiny standards of the data they get at periodical intervals.The banning of gold sale will also help to fight black money and minimise investments in gold at least through banks.

Dr.T.V.Gopalakrishnan
( This Comment is in response to an Article 'Cobra Post Sting Dont settle for a small fry, follow money trail' appeared in ET dated 15/3/13)

Big Companies, NPAs and black Money

The big companies having one or two as sick units have several benefits on tax and other reliefs and concessions.Even keeping accounts as NPAs, the possibility of converting black money into white and money laundering cannot be ruled out.How far bankers are vigilant is a matter to be probed.Ethical way of doing business has been wearing out and suspicious transactions violating prudence and values galore. As rightly observed compared to the past particularly in the 1970s and 1980s, the number of sick companies in well run and reputed groups are definitely on the decline.

Dr.T.V.Gopalakrishnan
( This comment is in response to an article "of affluent promoters, sick companies" appeared in ET dated 22/3/13)

Banks and Liquidity Management

The banks' liquidity crisis arises out of increased level of NPAs affecting the recycling of funds, poor mobilisation of deposits due to low interest rates, high level of persisting inflation, deteriorating customer service and reluctance of banks to accept Financial Inclusion as a business opportunity.The mismatch in ALM is bank's own making and despite this RBI has come to their rescue in several ways which include cut in CRR and interest rate. Banks' approach to business has undergone a sea change and their dependence on borrowed funds rather than deposits can be identified as the major cause for their liquidity problems. If the banks do not realise their mistakes and introduce corrective measures, many will face a severe crisis of confidence and may have to face the consequences. Dr.T.V.Gopalakrishnan (This comment apperaed in ET in response to a write up Are Indian Banks caught in a liquidity squeeze)

The need for a Real estate regulator is urgent

Developers who include multi national corporate Giants are taking customers for a ride and cheating the buyers of flats and villas left and right by swindling cash through various means.The buyers once committed and paid the advance have no means to fight the builder-developers for all their wrong promises, lapses and irregularities. The purchasers are spread over and have no chance of uniting and fighting. If at all they unite, it happens only after getting possession of the flats and by that time much water has already flown under the bridge. It is time the Govt set up a Regulator who should be able to scrutinize the accounts and vouch for the correctness fairness and veracity of all transactions. The need for a regulator is very urgent and paramount .   Dr.T.V.Gopalakroishnan.  ( This comment is in response to an article Govt mulling a tough regulator for Real estate deals appeared in ET dated 25/3/13)   

Customers, Banks and Regulators

It is a clear evidence that customers out smart banks to have their way and banks outsmart the regulators to circumvent the rules and regulations. There are some regulators who also feel regulation and supervision are unnecessary particularly in a liberalized atmosphere. This message is often conveyed through various means and the banks take full advantage of that.

Dr.T.V.Gopalakrishnan

( This comment is in response to the news item that HDFC banks suspends 20 of its officials for helping the money laundering activity that appeared in ET dated 17/3/13)

Cobrapost Findings on Banks' helping black money holders

The news is not surprising.What is surprising is that this has been brought out by a private agency instead of by the regulators and law enforcing agencies.
The banking system handles and holds a lot of black money is not a secret. Our informal economy may be equal to formal economy if not more is a well known fact.The selling of Gold coins,insurance products etc in branch premises has enabled banks to cover up all illegal transactions. The new generation Private sector banks are always a challenge to the regulatory system and they are ahead of the regulators in introducing innovative products without perhaps getting them vetted by the regulators. They know very well that the system permits or tolerates aberrations and the aberrations are done on whole scale basis.It is practically impossible for the regulators to check each and every transaction that takes place in banking.Further the present inspection also does not expect to be transaction based as per the liberalised approach. Banks know the weaknesses and they are smart in violating the rules and regulations. The auditors are banks own paid employees and they cannot be expected to point out their fingers at them.On the contrary they help the banks to cover up the transactions. There is always a trade off between banks and auditors.
The only way to stop banks from indulging in money laundering activities is to ban the sale of insurance products and gold coins. Further, the regulator has to tighten its noose by increasing the number of branches taken up for inspection and improving the scrutiny standards of the data they get at periodical intervals.The banning of gold sale will also help to fight black money and minimise investments in gold at least through banks.

Dr.T.V.Gopalakrishnan
(This is in response to a blog Cobra Post sting that appeared in ET dated 15/3/13

ICICIBANK and black Money

The officers have been made the scapegoat as usual.Without the involvement and understanding of the top officials of the bank,such irregularities cannot happen in so many branches spread over various cities. The instructions would have gone orally or in writing to have the transactions carried out in a defined manner.Small officers sitting in the counters cannot and will not take such risks in a whole sale manner risking their job, self respect and social stigma.This must have been done with the connivance of top officials and investigations should involve them. Even the customers who have been benefited by these devious deals should also be interrogated and booked for subverting the system.The Regulators cannot be expected to keep a watch on the individual transactions which is the duty of internal supervisors,accountants and auditors.Financial intelligence Unit can however keep a watch on such high value transactions as banks are expected to report to them. If they have failed to report then it is a serious lapse and should be made accountable Dr T.V. Gopalakrishnan( This comment is in response to a news item ICIICI BANK.Suspends18 officers appeared in ET dated 16/3/13).

Banks and Money laundering.

The news is not surprising. What is surprising is that this has been brought by a private agency instead of by the regulators and law enforcing agencies.  
 The banking system  handles and holds a lot of money is not a secret. The selling of Gold coins, insurance products etc has enabled banks to cover up all illegal transactions. The new generation Private sector banks are a challenge to the regulatory system and they are ahead of the regulators in introducing innovative products  without perhaps  getting vetted by the regulators. They  know very well that the system permits or tolerates aberrations  and the aberrations are at whole scale. It is practically impossible for the regulators to check each and every transaction that takes place in banking.Further the present inspection also does not expect to be transaction based as per the liberalised approach. Banks know the weaknesses and they are smart in violating the rules and regulations . The auditors are their own paid employees and they cannot be expected to point out irregularities. On the contrary they help the banks to cover up the transactions.
The  only way to stop banks from indulging in money laundering activities to ban the sale of insurance products and gold in branch premises. Further, the regulator has to tighten its noose by increasing the number of branches taken up for inspection and improving the scrutiny standards of the data they get at periodical intervals.The banning of gold sale will also help to fight black money and minimise investments in gold at least through banks.

Dr.T.V.Gopalakrishnan 
This comment is given in response to the news item that appeared in Times of India dated 15/3/13.

Inflation and Savings

The official inflation is reported to be at 10.91% where as the real inflation faced by the people is easily not assessable.In any case it should be 50% more than the official figures.Mainly those who goes to market and purchases things out of their hard earned money can feel the real impact of inflation. Those having black money,and those who earn without any ceilings or many times more than the average earnings of the lower middle class people also may not feel the pinch of inflation. Those who are in power and whose expenses are debited to some third party's account there is practically no inflation in the economy. The real rate of interest is negative for the past few years and there is no incentive or any money left to save with average middle class who only save a lot.The FM can reduce interest rate to any extent and it may not have any impact on savers as they have almost forgotten savings habit.This can be proved if a research on the subject is ventured. 
 Dr.T.V.Gopalakrishnan
( This comment appeared in Hindu Business Line in response to the report Small savings will fetch less interest from April)

RBI and Retired Employees

Unless and Until,the Retirees take up the matter to the court, nothing is going to happen. RBI though has a reputation as a prestigious institution to the outside world, it does not keep up this image with its own staff particularly retirees. Even the pension approved by the Central Govt in 1990 with a provision to have periodical updation on the basis of Central Govt employees has been stalled on silly grounds although it has its own funds to meet the commitments comfortably. Today’s position is that the Retirees cannot openly disclose their pension to even their own relatives to maintain the prestige of the RBI. The moment one tells the amount they look down upon and have a contemptuous feeling. Some of the class IV employees, lower division clerks, teachers and other staff comparatively lower in status (compared to RBI’s staff who include General Managers and Chief General Managers) retired from some state Govt and other services are drawing more pension and other medical facilities is a fact which RBI does not want to accept or believe to improve the pension of its retirees. The loss indicated in the statements is substantial and should be claimed through legal proceedings. The cost of living has skyrocketed and is no where near RBI’s inflation index is worldly known and the Pensioners are finding it hard to make both ends meet is the ground reality. The medical facilities offered are only a pittance and many are not able to avail it of due to certain practical difficulties because of age, place of settlement away from offices and the inflexibility of giving the medicines retirees want.
It is better to organize and fight the issue through court to get justice and remain in a dignified manner.

( This comment I gave in response to the write up My view - the age old problem by Mr Parab appeared in Tarambales'Posting. )

Tax dodgers and IT Dept.

This should make the IT Dept think and Act. Many companies Executives are earning more than a crore by way of salaries and perks.Many live on company expenses without reflecting on either salary or Perks. The list 42800 is grossly underestimated and it is a challenge to the IT dept and the ministry. It only smacks of the poor tracking system of incomes earned. It also reflects the efficiency and ingenuity by which people find escape routes to evade tax. Even a blind and illiterate person in India cannot accept this figure as correct.The flats quoting Rs more than 5 crores are sold like hot cakes in Mumbai and other metrpolitan centers. Self employed persons and professionals earns in crores and they have ways and means to get out of tax net or declare a symbolic amount and pay tax. IT officials, Chartered Accountants, and other honest citizens know that the number is wrong and the information system, method of filing returns, compliance by employers etc are erroneous. It is not a difficult taskl to arrive at the correct number through some checks and balances properly tied with SEBI, Bullion Markets, Stock markets, registrars, banks, etc using IT to the optimum level. Once the FM takes the initiative, the number should be minimum ten fold and the FM can raise the revenues what he targets to reduce the Fiscal deficit to a great extent. . Dr.T.V.Gopalakrishnan  (This comment apperaed in Times of India in response to Budget 2013-14 the FM warns Tax dodgers and no amnesty)

Govt Demands high dividend

Govt can demand the dividend from RBI and it generally obliges also.
But the fact that RBI has failed to take care of its own pensioners
whose conditions are going from bad to worse and whose requirements
can be met with a few lakhs or crores are being ignored by the Govt
and the Bank, does not stand justice or logic or reasoning. Time FM
and the Governor see the pathetic conditions of retirees of the Mighty
Organisation and open their eyes.The issue is  unfortunately pending
to satisfy the EGO of some officials at some level.

Dr.T.V.Gopalakrishnan
(This comment  is in response to a news item Govt demands high dividend from RBI appeared in a leading newspaper dated 2/3/13).