Customers cannot be taken for a ride by banks.

Such decisions should be circulated to all banks through the Reserve Bank of India so that banks do not indulge in such undesirable practices against the wishes of the depositors.Many customers have no time or patience to take up with their complaints with Consumer Forums is a fact and they suffer because of this. Consumer Forum does a good job and protects the customers but their decisions should be given wide publicity among the customers and public. There should be some arrangement to circulate such decisions of the consumer Forum through the Reserve Bank of India who is their regulator. Bank and its subsidiary should also be penalized by the RBI and IRDA for such malpractices pursued by banks and Insurance Companies.

Time to review the need for continuance of Planning commission.

The assessment is more or less correct. The whole of India is becoming BIMARU because of corruption and absence of ethics, values, honesty and integrity both in thoughts and actions. Greed has overtaken the economy and those who have access to money and power are becoming richer and richer day by day at the cost of marginalizing even the upper middle class.The persons earning Rs 25000 per month feel unsafe and uncertain to carry on with ever increasing cost on housing, food, clothing, school education,health care and other social expenses. In this back ground just think of persons who earn Rs 27 and 33 in rural areas and urban areas. As rightly pointed out by the author time has come to think of winding up of planning commission and reworking economic development with some other model.Change is recommended everywhere for prosperity and why not replace Planning Commission with a new set up and new thinking. Per capita income of this country is totally erroneous as distribution of wealth is never equitable by any stretch of imagination.Erratic taxation policies not only widen the gap between the rich and the poor but also add to inflation in the economy resulting in the erosion of earnings and making life miserable to survive.Corruption has become a way of life for those who provide some sort of service and without giving bribe nothing happens. To get a conveyance title of plot of land or a flat (Katha in local Language) the officials do not know how much to demand and if one resists to pay, for months together one will not get the certificate despite repeated visits to Village offices and requests to officials.This is only a small example.For anything and everything bribe has to be paid first and even then work is not done. The country at this rate will become a Bimaru one as warned by the author.No silver lining is visible as on date.

Dr T.V.Gopalakrishnan

(This is in response to an article Planning commission needs winding up that appeared in Business standard dated 28/7/13)

Meaningless comparison among the RBI Governors since 1990.

The comparison among Governors’ is meaningless as the performance is linked to the political climate and support in the Governance system, sound economic policies and conducive external sector environment. All these are found missing during the last five years when Dr Subbarao took over in the year 2008.The present RBI Governor's period is some thing unique in the history of RBI. He took charge when there was global financial turmoil and he had to ensure that Indian Financial system and the economy escaped unhurt because of the crisis. Subsequently, he had the misfortune of fighting both inflation and growth without the support of the Govt and the fiscal policy measures. Not only he failed to get the support but also had to face the displeasure of the Govt in not yielding to its pressures to dance to its tunes. He had to face the humiliation when the Govt set up the FSDC and made the RBI as any other institution like SEBI and IRDA without having any supremacy which as a Central bank of the Country it is entitled to. Adding insult to injury, the Government started giving directions to banks directly bypassing RBI. This gave the banks an upper hand and they gave the impression that they cared for more the Govt than the RBI. The SBI the biggest commercial bank instead of giving full support to RBI to ensure success of its monetary policies opposed RBI's every move to curry favour from the Government.The banking system failed both RBI and the Govt leading to such a pathetic condition of the economy.The banks tried to undercut both and landed themselves in liquidity crisis bringing down deposits, adding to NPAs and creating unprecedented mismatch between assets and liabilities. SBI chief has been against RBI policies and has been some sort of indirect support to other banks in challenging RBI measures. The result is the Govt suffers, the economy suffers, the banking system suffers and RBI has to tackle everything together. But the Governor will prove to be right in his thinking and actions if the Govt and the banks dare to introspect as to what they have done to RBI during the last three years in particular and realise their follies..Governor can keep his head high for his boldness and the challenges he faced to maintain the Reserve Bank's importance and supremacy without yielding to the pressures of the Govt and without having the normal cooperation and support of the banking system.Subba Rao's era will have some special place in RBI and Indian Economy's history for the challenges he faced both from the Govt and the banks. The economists will reailse the important role played by RBI during the most inactive performance of the Govt when they introspect in leisure. The Comparison should have been on the political leadership the economy had since 1990 to get an appropriate and logical conclusion.

 Dr.T.V.Gopalakrishnan 

 This comment is in response to a news report Has RBI Governor Subbarao delivered that appeared in Business Standard dated 27/7/13).

Frauds in banks perpetrated by rich

Frauds are perpetrated more by the rich,mighty and powerful people than the poor is not a revelation.Further more frauds are under advances of banks are also not new. Some of the nonperforming assets  of banks are because of frauds, are also known and these happen with the connivance of top management  of banks are all established truths.  But the unfortunate part is that the losses on account of frauds are borne by poor depositors and other stake holders of banks is what the Dy Governor  has not revealed.The rich always steal and the poor attempts to steal when his times are bad and survival becomes difficult, is a fact and this is the issue to be dealt with by the authorities. Changing the definition of fraud will not make much sense, but changing the approach of banks to rich and poor in the grant of advances in particular can have some impact in reducing the fraud at least by the poor. The top management knows how the loans to rich turn into npas and finally get written off. Only the loans to poor are being seriously followed up, staff are made accountable and penalized Will the authorities seriously look into the real issues in the background of what has been made public now by none other than the regulator of the banks.

Dr.T.V.Gopalakrishnan

(This is in response to the observation "Fraud on banks , more by the rich,"  made by Dy Governor  k.C.Chakrabarty of the Reserve Bank that appeared in The Hindu Business line dated 27/07/13).

The era of RBI Governor Dr Subbarao

The present RBI Governor's period is some thing unique in the history of RBI. He took charge when there was global financial turmoil. and he had to ensure that Indian Financial system and the economy escaped unhurt because of the crisis. Subsequently, he had the misfortune of fighting both inflation and growth without the support of the Govt and the fiscal policy measures. Not only he failed to get the support but also had to face the displeasure of the Govt in not yielding to its pressures to dance to its tunes. He had to face the humiliation when the Govt set up the FSDC and made the RBI as any other institution like SEBI and IRDA without having any supremacy which as a Central bank of the Country it is entitled to. Adding insult to injury, the Government started giving directions to banks directly bypassing RBI. This gave the banks an upper hand and they gave the impression that they cared for more the Govt than the RBI. The SBI the biggest commercial bank instead of giving full support to RBI to ensure success of its monetary policies opposed RBI's every move to curry favour from the Government.The banking system failed both RBI and the Govt leading to such a pathetic condition of the economy.The banks tried to undercut both and landed themselves in liquidity crisis bringing down deposits, adding to NPAs and creating unprecedented mismatch between assets and liabilities. SBI chief has been against RBI policies and has been some sort of indirect support to other banks in challenging RBI measures. The result is the Govt suffers, the economy suffers, the banking system suffers and RBI has to tackle everything together. But the Governor will prove to be right in his thinking and actions if the Govt and the banks dare to introspect as to what they have done to RBI during the last three years in particular and realise their follies..Governor can keep his head high for his boldness and the challenges he faced to maintain the Reserve Bank's importance and supremacy without yielding to the pressures of the Govt and without having the normal cooperation and support of the banking system.Subba Rao's era will have some special place in RBI and Indian Economy's history for the challenges he faced both from the Govt and the banks. The economists will reailse the important role played by RBI during the most inactive performance of the Govt when they introspect in leisure. 

Dr.T.V.Gopalakrishnan

The Governor and his predicament

The  present  RBI Governor's period is some thing unique in the history of RBI. He took charge  when there was global financial turmoil. and he had to ensure that Indian Financial system and the economy escaped unhurt because of  the crisis. Subsequently, he had the misfortune of fighting both inflation and growth without the support of the Govt and the fiscal policy measures. Not only he failed to get the support but also  had to face the displeasure of the Govt in  not yielding to its pressures to dance to its tunes. He had to face the humiliation when the Govt set up the FSDC and made the RBI as any other institution like SEBI and IRDA without having any supremacy which as a Central bank of the Country it is entitled to. Adding insult to injury, the Government started giving directions to banks directly bypassing RBI. This gave the banks an upper hand and they  gave the impression that they cared for more the Govt than the RBI. The SBI the biggest commercial bank instead of  giving full support to RBI to ensure success of its monetary policies opposed RBI's every move to curry favour from the Government.The banking system failed  both RBI and the Govt leading to such a pathetic condition of the economy.The banks  tried to undercut both and landed themselves in  liquidity crisis bringing down deposits, adding to NPAs and creating unprecedented mismatch between assets and liabilities. SBI chief has been against RBI policies and has been some sort of indirect support to other banks in challenging RBI measures. The result is the Govt suffers, the economy suffers, the banking system suffers and RBI has to tackle everything together. But the Governor will prove to be right in his thinking and actions if the Govt and the banks  dare to introspect as to what they have done to RBI during the last three  years in particular and realise their follies..Governor can keep his head high for his boldness and the challenges he faced to maintain the Reserve Bank's importance and supremacy  without yielding to the pressures of the Govt and without  having the normal cooperation and support of the banking system. 

The need to contain gold imports and make best use of the domestic gold resources

The article is well written and it offers a good suggestion to encash gold by offering attractive financial instruments.This solution is good to take care of the stocks already accumulated and scattered all over the country estimated at a staggering 20000 tonnes or even more. The practical approach to have credibility among stockists of gold who include households, businessmen etc is to have a Gold Bank established by the Government and the Reserve Bank jointly and mobilise the gold against creation of deposits at some rates determined based on market trend.The Gold being used as a medium of exchange should be declared as a criminal offence and Government should be able to track these transactions as is done in the case of Cash Transactions over Rs 10 lakhs as Suspicious transactions.The urgent need of the hour is to curtail imports not only for the present and for the future as well and at the same time utilise the gold resources domestically available for domestic investment and development purposes.The craze for gold has to come to an end and for that both economic and social approaches have to be simultaneously attempted.If inflation is kept under control,and proper financial literacy is imparted even among the best educated and literates, the import of gold can be contained to a great extent in the long run.

 Dr.T.V.Gopalakrishnan 

(This comment is in response to an article Gold and the CAD that appeared in Business standard dated 23/7/13)

Bane of Corruption

Accountability and responsibility are missing and ‘anybody can get away with anything’ has become the order of the day (“India has moved to pre-1991 stage”, Business Line, July 18).

Corruption is the root cause and nothing can be got done without giving bribes or misusing contacts. Regulation and supervision are directly linked to corruption. Implementation delays are accepted. Unfortunately, the code of conduct and citizens charter are seldom practised. The KPMG CEO’s observations deserve to be discussed in Parliament and action taken.

 

T. V. Gopalakrishnan

(This letter appeared in Business line dated 23/07/13). 

Tackling crisis of confidence in economy

July 21, 2013:  

The economy is facing a crisis situation. Major parameters such as the index of industrial production, inflation and consumer price index are not favourable to instil confidence that some improvement can be expected in the near future.

The Government seems to be aware of the problems and some measures have been taken to improve the investment climate, but how far these measures can produce result in the absence of follow-up actions is the concern of investors, particularly foreign investors, because of the political uncertainties.

Even if the situation favours in all respects nothing can be done against the time lag involved in yielding results. Monsoon appears to have favoured agricultural production giving some hope to improve food supplies and related inflation but here again the problem of procurement, storage and supply chain management remains.

The GDP growth, to which the other parameters, that is fiscal deficit, current account deficit and employment generation, are closely linked cannot be expected to be comfortable in the absence of strong supporting financial system.

What is the way forward and how to put back the economy on the trajectory of growth are the questions that linger in the minds of every one concerned with the economy.

Inflation

The foremost thing is to bring down the inflation at any cost incurred by the Government and the economy.

The RBI has been doing its best for the past few years but it was not given the attention it deserved by the Government. The RBI’s efforts have kept inflation under check and below the double digit.

Raising resources from both domestic and external sectors are the major hurdle and herein lies the solution to give strength to the economy.

Domestic resources are in fact plenty but channelising these to productive investment is what matters. Confidence building, followed by result-oriented actions to convert non-productive assets into productive ones, is paramount to bring back investors into main stream of production.

Heavy food stocks lying and going waste if channelled to reach the masses at reasonable prices will, to a great extent, bring relief to food-related inflation. Availability of vegetables and fruits needs to be stepped up and their wastage due to non-availability of cold storage facilities, timely transportation, marketing and distribution need special attention.

Gold bank

Gold stock is aplenty in the economy and cash resources are also in abundance. How to tap them to aid the economy is what the Government should think about.

The setting up of a gold bank is a practical solution which will wipe out some of the ills of the economy.

This will help improve the savings in the system in money form and the craze for gold and its imports, as a speculative commodity and a hedge against inflation, will diminish if not vanish.

The cash-rich companies and high net worth individuals should be attracted to go in for investments by offering tax incentives and special treatment to do business with ease by removing major hurdles in the acquisition of land, availability of raw materials like power, raw materials and transport.

Check Volatility

The financial system without the support of which the real economy cannot perform and which is undergoing a tough time due to volatility in different markets needs to be stabilised.

The influence of the major markets that is capital, bond and forex by the external capital flows has to be minimised and for that the local institutions that deal in these markets need to be strengthened with resources, products, close integration, regulatory and supervisory measures.

To reduce volatility in the forex market, the RBI and the Government can consider the possibility of setting up an Exchange Rate Stabilisation Fund with the active involvement of exporters, importers, non-resident Indians and other forex earners. SEBI and IRDA can do a lot to bring in resources through improved capital market operations and insurance market.

The recent steps of the Government to attract FDI funds can be encashed by these two regulators by appropriate initiatives to retain and properly utilise the funds. NRI resources need to be tapped to the optimum level.

Financial support

The banking system, one of the major sources of financial support both to the economy and the Government, is dependent more on borrowed and purchased funds and this needs to be changed by massive deposit mobilisation and other means. Their non-productive assets lying as advances towards food procurement and other industrial, agricultural, housing education etc are a major handicap and need some workable and self-sustaining solution.

The banks with more of long-term assets and short-term liabilities cannot be expected to lock in their funds for a longer period and face liquidity crunch every now and then.

Such long-term nature of advances with increasing percentage of non-recoveries affects banks’ profitability and consequent losses to all stakeholders.

Banks should go in more for long duration deposits even if the cost is a bit high.

The Asset Liability Management of banks has neither helped to reduce the cost of funds nor the mismatches in interest rate and maturity.

The government can relax the tax on savings and make up the loss through improved use of bank deposits in productive ventures.

(The author is a consultant based in Bangalore. Views are personal)

(This article was published on July 21, 2013)

Keywords: Economy, crisis situation, index of industrial production, inflation, consumer price index, investment climate

Automated Internal Contro systems without Human Involvement is not good.

As it is the human touch and inter actions with customers are missing in banking and this approach has its own short comings. The blind implementation of KYC norms in banks drives away genuine customers and affects banks business particularly deposits is the ground reality. With the invasion of IT the banks way of doing business has undergone sea change and more innovative procedures introduced under Payment and settlement system using IT the banks have stopped accepting of outstation Cheques for collection and they expect the customers to go in for NEFT or RTGS. The innovations instead of facilitating better convenience have taken away the practices pursued by banks since evolution of banking. Depending fully on technology has its merits and demerits and to enhance the quality of service proper blend of human Resources with Technology is the need of the hour. From this angle the suggestion that automated internal control systems cannot be of much use.

Dr.T.V.Gopalakrishnan
(This comment in response to the editorial stung into action in Business line appeared on21/7/13) 

India has moved to pre 1991 position

Each and every remark needs to be analyzed and introspected by the politicians, bureaucrats, administrators, policy makers, and professionals from all walks of life. Accountability and responsibility are missing and anybody can get away with anything has become the order of the day. Corruption is the root cause and nothing can be got done without paying money or using what ever contacts to escape payments. Delay is an accepted practice and unfortunately there are code of conduct and citizens charter which are seldom practiced . Nothing is implemented. Regulation and supervision are the casualties and they are directly linked to corruption. Literally from Cradle to grave corruption is involved is an open secret. The observations by the CEO ,KPMG need attention by Parliamentarians and deserve to be discussed in parliament . Discussions should result in solid remedial action.

Dr.T.V.Gopalakrishnan
(This comment is given in response to an article India has moved to pre 1991 position that appeared in Hindu Business Line)

Are the expectations on the fundamentals of the economy real?

Every thing is a joke. Containing Fiscal deficit, Current account deficit, inflation, and achieving GDP growth above 6% etc are not credible to the public when the confidence in the whole management of the economy is eroded. The ease of doing business has further been made difficult because of lack of confidence in the political stability, economic slowdown, social infrastructure degradation and technological challenges remaining to be fully taken care of. Stability in the areas of finance, banking etc are becoming a threat every passing day.
Dr.T.V.Gopalakrishnan
(This comment is in response to an article' Fiscal consolidation a joke" That appeared in Business line dated 17/7/13).

Depositors are treated badly by banks.

It is a fact that savers are treated very badly.It is unfair to expect depositors to cross subsidise the bad borrowers, and the economy by making use of their money for investments in Government securities and bad borrowers who loot the banks.SB rate of interest remains at 4% though it is more than a couple of years the Reserve Bank deregulated SB interest. The FD interest is being brought down as and when the banks get a chance. The present rate is less than 9% per annum when the inflation is around 10%. Apart from difficulties of saving in these days of spiraling inflation and other increased cost of living which include high rents, high education costs, high transportation costs,high medical expenses and miserable  living conditions, people  sacrifice and save a little in banks  for reasons for survival and other social aspects, but the rates are discouraging and taxes have to be paid even on a small interest amount exceeding Rs 10000. While dividends running into crores of Rupees are exempted from taxes, the hard earned savings of people of small means are not allowed to fetch a reasonable rate of return.Banks also fail to come to the rescue of the economy and the people as they do not want to bring down their luxurious expenditures and NIM. The base rate  at around  10% of most of the banks is questionable as they get deposits at less than 6% on an average and they make advances at around 14% and above. The whole system is playing mischief is a fact and savers suffer ultimately.. The Governance system and accountability are major casualties in these days of free for all. Earlier some serious thinking is given and action initiated, the position will move from bad to worse.The banks approach to business and the way they treat depositors need a thorough review before they get damaged beyond repair.

Dr.T.V.Gopalakrishnan

( This comment in a slightly modified form is in response to an article 'Time to treat savers fairly" that appeared in Business standard dated 16/7/2003).

A healthy Financial system will strengthen the economy too.

The blame game between the RBI and the Government for the failure of the economy to perform should end. They should work together to turn the economy into a fast performing one keeping the financial sector stable, strong and healthy.

July 14, 2013:  

The IMF and the World Bank in their financial stability assessment report on India, released in mid-January this year, observed that the country has made remarkable progress in developing a stable financial system.

It also states that the country has developed a regulatory and supervisory regime for banks, insurance and the securities market that is largely in compliance with international standards.

However, the report adds a rider, that despite these, the financial system still faces long-standing impediments and new challenges to stability.

Stability may be HIT

This is more or less reflected in the recently released ‘Financial Stability Report of the Reserve Bank, wherein it states that “while stress tests reveal that the financial system is resilient to shocks currently, deteriorating macroeconomic stability can eventually erode financial stability.”

It is a well-acknowledged fact that the economy is facing a lot of problems for quite some time now.

GDP growth has been slowing, missing the target by a wide margin. And, other macroeconomic indicators, such as fiscal deficit, current account deficit, inflation (particularly retail inflation) and unemployment, have also deteriorated. The measures taken by the authorities have not been yielded the desired results.

Agricultural and industrial production, too, has not been encouraging, and the confidence level in the economy has also not been good enough to attract investments.

The financial system, which is said to mirror the real economy, has been facing the litmus test of whether it can continue to remain stable and provide much-needed relief and support to the economy.

The financial system, which consists broadly of the capital, money, forex, debt, and bullion markets, accounts for a major chunk of the transactions in the economy. However, these markets have experienced volatility of late, thanks to both internal and external factors. The rupee is on a free fall, the Sensex is swinging both ways, and bond market yields have gone up.

Also, the banking system has been facing liquidity, credit, operational, forex, and interest-rate risks.

The challenges before the banking system are many and if it fails to adhere to the regulatory requirements and, at the same time, does not support economic growth, its stability is at risk.

Banks have to necessarily readjust their asset-liability management and minimise their market borrowings, raise both current and savings bank account deposits, and long-term deposits beyond three and five years.

They have to avoid short-term deposits and reduce the maturity mismatch too.

The menace of NPAs (non-performing assets) has to be tackled on a war footing, and bad loans other than those caused by the economic slowdown have to be recovered through sale of assets or through effective and speedy recovery mechanism.

The forex market has been witnessing ups and downs due to uncertainties in the international market and on account of domestic issues as well. The external debt as at end-March 2013 was at $390 billion, a 12.9 per cent rise over the previous year. It is way above the foreign exchange reserves, which stood at $288 billion as of June 21.

The trade deficit in May peaked at $20.1 billion, and the foreign inflows are not adequate to finance the deficit.

The measures to contain gold imports have had some positive effect, but the fall in rupee value has partly offset this.

The stock market has been fluctuating widely, and this has been dictated largely by FIIs. But this can be to a large extent be prevented if market regulators/players introduce some innovations in the market.

To counter the dominance and influence of FIIs, the participation of retail and NRI investors needs to be considerably improved by increasing their quota. Similarly, the bond market also needs to be deepened by marketing infrastructure development bonds by major undertakings with government guarantees. The takeout finance concept needs better marketing and encouragement.

The need of the hour is to strengthen the economy with a strong financial system. The blame game between the RBI and the Government for the failure of the economy to perform should end and, instead, they should work together to turn the economy into a fast performing one keeping the financial system stable, strong and healthy.

Dr.T.V.Gopalakrishnan

(The author is a Bangalore-based financial consultant. The views are personal.)

(This article was published in Business line on July 14, 2013)

Keywords: Healthy financial system, strengthen, economy, RBI

Kudos to Supreme Court

  A very good comment by the author on the SC's decision that a convicted MP or MLA cannot continue in office. Hope the politicians will take the decision of the SC in right spirit and will implement the rule in letter and spirit and bring some decency, order and acceptance of the political system in the country. The muscle and money power should get replaced by the mindset to serve the masses without exploiting their ignorance of the values of democratic system.Keeping people in perpetual poverty and illiteracy had enabled the political parties to come to power and criminal background supports to capture that power with ease ad masses can be intimidated and bullied to vote as they want. The decision of the SC is a great relief to the masses as they can expect some good leaders with fine quality of mind and character to rule the country and take it forward with all welfare measures without loss of revenues to the exchequer and at the same time ensuring that the allocated funds reach the poor.If SC's decision could be successfully implemented, the country and the people will prosper fast and the prosperity at present seen only in some quarters can be converted into prosperity every where. Once the corrupt practices are removed, the benefit can be seen every where.Kudos to SC for taking this step. 

Dr.T.V.Gopalakrishnan

( This is in response to an article Three Cheers to men in black that appeared in ET recently).

Indian Post Bank only deserves a bank license

Out of the 26 applicants for the bank licenses, the only applicant which deserves to be favorably considered is perhaps India Post Bank. They can easily comply with  the  requirement of spreading their wings to rural and semi urban centers as they are already in existence in these centers. Besides,they have an easy access to all categories of people, whether, they are poor or rich, illiterate or educated,employed or unemployed,farmers or non farmers, laborers or white collared employees etc. They do not require heavy infrastructure investment in the initial years as they have a fairly very good set up in terms of, building, staff and technology. The main requirement of the Reserve Bank that the new bank should intensify Financial inclusion and achieve the target as desired by the Reserve Bank can be easily complied with only by the India Post Bank. It is easy for the India Post Bank to ensure 100 % Financial inclusion a  reality than on paper as is done by other banks in the field. Further Financial literacy which is the foundation for the financial inclusion to make it meaningful and result oriented can be easily achieved if India Post Bank is given the license. Being a Government institution, and having earned a very good name and reputation for a pretty long period for its dedicated service , it is only proper that this institution should be allowed to be converted into a bank . Once it becomes a bank and starts its operations, even the Regional Rural Banks which have failed to deliver can be considered for a merger with the India Post bank so that it gets strong and healthy to make the banking a reality among the masses. The views of the author are fantastic and seem to have come out of his experiences of the intricacies of banking, banks' failure to achieve financial inclusion etc. India Post Bank foots the bill most appropriately and can give a boost to rural savings and rural development, the need of the hour.

Dr.T.V.Gopalakrishnan

( this comment is in response to an article New Bank Licensing Derby that appeared in Business Line dated 12/7.07).

Banks and Customers

It is now Customers' service to banks by providing deposits and running after them to get some attention and that too after agreeing to pay a fees for any service.Only a handful banks and that too in Private sector has enhanced SB rate of SBinterest, where as PSU banks have not even thought about it.To get TDS one has to repeatedly call on banks and even if they have all the details of Customers including e mail address  they never care to send the TDS as soon as the certificates are ready. Personally I had to close my FD accounts with a private sector bank just for the reason that the bank failed to send me the TDS despite my personal visit and request by mail  to send the TDS to my mailing address  as I was away on an assignment in a different locality. I addressed a letter to the RM of the bank in the matter and he apologised for that incident.Unlike in the past the bank staff have no sensitiveness to lose the deposit and business. On the contrary they are happy to get rid of the customers. Since there are no alternatives to save money with safety and liquidity people particularly senior Citizens go to banks ignoring the negative rate of return and other irritants. KYC ie either kill your Customer or Know your Contacts in the bank or  keep away the prospective customers is  what is practiced  is the the ground reality. It is for the banks to know the customers and the insistence on that by the regulator is something unacceptable for a major chunk of customers. All are not having illegal money and money laundering activities.Not even a percentage of customers come under suspicion and for that all  have to be treated under suspicious manner  is not fair and irritating the customers. The banks should monitor the transactions and assess the customer for his suspicious conducts.Understanding the customers is more relevant than knowing the customers. The charm of having a bank  account has literally disappeared  and dealing with the banks has become an irritation without any escape route.Now  bank account  has become a necessity to survive and for that the customers have to necessarily put up with all sorts of harassment and inconveniences.

Dr.T.V.Gopalakrishnan

This comment is in response to an article Personalization of banking Woes of Customers that appeared in Money Life.

Falling rupee and Common man

Falling rupee will result in climbing prices of all commodities and servicesThe increase in prices will be passed through the common man as he hasno choice but to receive the burden. As it is the common man has no hopesof getting any reliefs from price rise experienced in food prices, transportation costs, house rents, school fees, medical expenses, and other maintenance costs. What theory of economics the Government is following needs to be explained to people so that they can have their own theory to circumvent if possible. Dr.T.V.Gopalakrishnan  ( This comment is in response to a write up " Falling rupee is not just pinching but it is killing all of us " that appeared in Times of India dated 9/7/13)

Present economic Situation and IMF loan.

The economy is in bad shape due to mismanagement on several fronts. Liberalisation has unfortunately let loose non accountability and the failures are tolerated as if nothing has gone wrong.Series of scams and some popular measures like write off of farm loans etc have taken the economy to such a crippling condition.The mistakes cannot be allowed again to be repeated by the Govt again although it may like to pass on the burden and blame to the next Govt if there is a replacement which is not ruled out as people are fed up of spiraling prices, corruption and miseries of life. The solution , how ever does not lie in going for an IMF loan as happened in 1991, but to raise some resources through NRI bonds even if it is slightly costlier.Some incentives can be attached to these bonds in such a way that these loans  do not eventually have to be repaid in dollars.There are umpteen ways of raising resources domestically also by bringing in some innovative schemes to tap the savings of the HNIs, Cash Rich Companies,etc. The present mood of the people and investors needs a change and the confidence in the Governance system has to have a boost to save the economy from further disaster.The Financial System has to be given a facelift and the initiative has to come from SEBI to attract NRIs to Indian market in a large scale.Better to avoid foreign debt particularly IMF loan as it may have its own baggage to be taken care of and that also will affect the masses. Any measures without taxing the ordinary masses are welcome.

Dr.T.V.Gopalakrishnan

(This comment appeared in ET in response to an article on "It might not be a bad idea to emulate Pakistan and approach the IMF, but on our terms".)

Who is the next RBI Governor ?

Who ever comes as Governor nothing great can be achieved in the economy unless the structural reforms needed by the economy are put in place along with strict administration to prevent corruption,black money and other malpractices.This can be done only by the Government. It is not a political gimmick . Any sensible fellow as Governor will not act as per the Govt directives if he is a professional economist and if he has in mind the welfare of masses. Inflation is the greatest enemy of mankind and RBI has to contain it to ensure sustainable growth.Once inflation is at reasonable level growth cannot be stopped by anyone.Dr.T.V.Gopalakrishnan (This is in response to articles that appeared in Times of India and Economic Times dated 8/7/13).

Deafulters, banks and RBI

This is an important topic the author has dealt with. The bad loans of the banks are nothing but a decent way of organised loot is a fact known to all in the knowledgeable circle in money banking and finance. No excuse in keeping large and willful defaulters in banks books, when there is a built in mechanism to solve the problem and the statistical model developed through research, approved by veterans in the field and made available in the book form is completely ignored even without a debate though the solution has been recommended for a trial by the examiner of the thesis way back in2003.  The details of this thesis published as a book carrying the preface from none other than Chairman, PMEAC can be had from internet through google search by just typing Management of Non Performing Advances. This solution was presented in several seminars attended by Corporates, Chairman of banks and academics and several articles and letters had been written in all leading commercial dailies. A glance through the blog econo-reflexions.blogspot.com will be sufficient to get an idea of the efforts put in to have a debate on the solution offered. Unless and until an inbuilt mechanism is introduced to discipline both borrowers and bankers, the problem of defaulters will continue to haunt the banking system. This is not an insurmountable issue, but authorities, banks and borrowers have an aversion to introduce a lasting solution to contain formation of NPAs The borrowers and banks enjoy some known and unknown benefits by having NPAs in the books and the authorities keep a blind eye to the problem The unfortunate part of this is that the depositors, good borrowers, shareholders and general tax paying public bear the brunt and hence defaulters have no concern. “There is salve for every sore.” Provided there is a will.

Dr.T.V.Gopalakrishnan

(This comment is in response to an article that apperaed in Times of India dated 7/7/13.)

Consumers and Prices of consumer durables

This refers to your editorial Paying the price (Business Line, july4,2013)The economy itself has become high cost thanks to erroneous taxation, imported inflation, domestic inflation, the aggressive pricing pursued without really assessing the affordability of a large segment of population and the never ending greed to maximize profit without any ethics or values . The service tax, low rate of interest on savings of the people, high cost of borrowings, uncertainty of continuing in jobs because of employment conditions in a deteriorating economy have been the major issues affecting the general consumption.  Above all, lack of confidence to survive in the whole system as to what is in store for the future in the absence of any social security, lack of accountability on serious lapses in the event of failure of the institutions etc have been lingering in the minds of people which find expression in the lack of demand for consumer items and general consumption pattern. The practice of having maintenance expenditures on every consumer item discourages the demand for such items. 

Dr.T.V.Gopalakrishnan

(This comment is in response to the editorial paying the price that appeared in Business Line dated 4th July 2013).

The FM and RBI

The FM’s messgae to RBI on the eve of his meeting with the PSU banks to have a broad based approach to ensure growth of the economy and employment only smacks of the dominance of the Government over RBI without appreciating the Central Bank’s role in maintaining price stability, financial stability and monetary stability in the economy. No doubt growth is essential for any economy to sustain, but RBI alone cannot be expected to do the trick ignoring the over all environment of political instability, lack of governance and support in the form of strong and convincing economic and administrative policy reforms. The ills of the economy are not the creations of RBI have to be understood without any bias and the reasons for such a state of affairs have to be studied in depth. Passing on the buck will not solve the problems. It can at best help to survive an uncomfortable situation faced by the Govt for a temporary period. The high Current account deficit, the fiscal deficit, slow down of the economy because of shortage of savings and investments, failure of Government in taking appropriate administrative policies to ease the power situation, land acquisition, and clearance of huge number of projects awaiting approval, and some of the misguiding taxation policies. Large scale corruption and the difficulties encountered in doing business have affected very badly the atmosphere for investment and growth, where RBI has very limited say. RBI is the saviour of the economy to a great extent with its’ tight  and also flexible monetary policy is what is to be accepted and appreciated. Even then the present stability of the financial system and monetary system cannot be said to be as comfortable as they were a couple of years ago. This should be the worrying factor both for the Govt and RBI at this juncture.

Dr.T.V.Gopalakrishnan

(This comment in response to a news item"RBI must understand its mandate in a broad sense is published in Business Line dated 3/7/11).