Why not declare RBI as Government Dept?

Declare RBI as Government Department? It is time Government make it transparent what is meant by Autonomy for RBI? RBI's most of the vital functions including the monetary policies are carried out after consulting formally and informally the Government and the Government directly and indirectly exercises lot of control on RBI. The fact remains that RBI does not have even the power to update the pension of its own retired officials who survive on a pittance amount fixed in the 1990s is a reality and the Government has stopped the RBI Board in updating the pension and has been dilly dallying for more than a decade in giving its approval. If the RBI gets merged with the Government, at least its employees who include retired employees in particular can have a better compensation on par with the Central Government and the Central Government can run the banking system the way it wants.Its  Central Banking Functions are in any way carried out as dictated by the government.

Dr.T.V.Gopalakrishnan

(This comment is appearing in BS)

At last wisdom Dawns

Better late than never. Happy to see that wisdom has finally dawned on Mr Advani at last. All these day s he was half heartedly supporting Mr Modi and on many occasions he has expressed his  displeasure and unwillingness to support Mr Modi creating some confusion in the minds of BJP supporters and sympathisers. If Mr Advani had taken this stand from the very day Modi was declared as PM candidate and had he been present in the Goa meeting, the Modi wave would have been a tsunami by this time all over India including the south. Mr Advani played hide and seek keeing Mr Modi's rise in popularity under Check and giving the Congress and other opposition prties to capitalise out of his bickerings against Mr Modi. Any way all is well that ends well. Hope he will  and he can ensure success of BJP and give Mr Modi his dues and the well deserved Victory for him as PM candidate. The mood of the Country is in favour of a change and a change for Political stability, Economic development,Social revolution and Technological sweep for the country. The PEST treatment is overdue for the nation. Mr Modi can give the treatment effectively and fruitfully.

Dr.T.V.Gopalakrishnan
( This comment is given to BS).

RBI will have a sigh of relief

IF Chakraborty goes , RBI can definitely get back its lost glory and can make its monetary policy yield some positive and intended results.Being a DG in the RBI with a commerical banking culture, he has contributed to make RBI also a bit non performing and brought it on par with commercial banks. RBi should feel highly relieved as, if the lieutenants are not very cooperative and understanding and do not identify themselves with the RBI and its functioning which are totally and diametrically opposite to Commercial banks operations, the achievements of its monetary policy objectives are rendered difficult.Dr Subba Rao had to face many an embarassing situations from the thoughtless utterances of the DG on RBI's policies is a fact reported in media. Perhaps Dr Chakraborty is the only exception to have played a different role after enteering the Central Bank from a commercial bank.

Dr.T.V.Gopalakrishnan

(This comment appeared in Business standard dated 31/3/14).

Can Indian System fix the crooks?

An excellent piece from Mr iyer. But how far this can be replicated in India where all political leaders except a very few are interested in looting the nation by hook or cook using all their political and executive powers. The independence of Judiciary and Police depends by and large on the individuals and political interference and influence decide whom to target and which cases to be pursued. The delaying of cases is a well accepted policy to suit the power that be and there are no intentions to fix the culprits with any logical investigation and conviction. The article reads excellent and the suggestions are worth implementing from today itself and the fact remains that nothing will happen during the next two or three generations if the present trend is an indication.

Dr.T.V.Gopalakrishnan

(Thiscomment appeared in TOI dated 30th March 2014 against Swaminathan Iyers' article To Catch a Crook)

IT Department can be more effective to improve compliance and tax revenues

The IT officials do not seem to have fertile imagination and chase fellows who make hell of a money in the economy.With the boom of the economy after itsliberalisation the Construction industries have expanded and the number of flats and houses built have increased leaps and bounds increasing employment and business opportunities left and right particularly in cities making the labour costly and rarely available. This boom has generated a lot of small businessmen doing Carpentry, furnishing and providing varieties of small services and charging the service takers in lakhs and lakhs exploiting the middle class . For instance just for carpentry work  ie to cover a balcony and provide a two bed room kitchen with  ward robes, they charge anything betweenRs 15lakhs and Rs 20 lakhs and most of the service providers do not take take cheque or any other mode of payment other than cash. It is doubtful whether these persons have heard of sales and Income tax.There are thousands of such businessmen and like this there are several big fish as well avoiding and evading taxes in urban and metropolitan centres. Leaving them, the IT dept is after the retired pensioners and harassing them for a pittance if any at all is something strange and not comprehensible. If the the evasion of tax is plugged the fiscal defit can be wiped out and there can be suufficient surpluses to reduce the rate of Income tax and better compliance. The economy will also  be in good shape and the society also will have the awareness to pay tax and mintain some ethics and values to be proud of. The IT department also can have the satisfaction of doing their job effectively benefiting the Department and themselves for improved tax compliance.

Dr.T.V.Gopalakrishnan

Waste of tax payers Money on Aadhar Card

Aadhar instead of emerging as a tool to prevent Corruption and mis use of subsidy has become the source of Corruption and information sharing about individuals' privacy exposing to all possible inconveniences, harassments and unknown risks. In the name of UID many sections of the society have made huge money apart from the Government spending in thousands of Crores ranging between 50000 crores and 115000 crores as reported by media. Many have lost also their hard earned money.Nandan Nilekani a well respected and a high tech person known nationally and internationally unfortunately fell a victim of the Politicians' game plan and spoiled his image. Unfortunately he has joined the Congress and is fighting the election. The Concept of Unique ID is excellent but it could have been linked to other personal identifications of individuals and Mr Nandan should have kept Government agencies away from the very compilation and issue of UID cards. Government agencies are known for Corrupt practices and corruption and making fast bucks in the name of UID spread all over the Country and millions of people spent huge sums to get the required documents and the ir linkages. Gas agencies in some places insisted for Notary signatures for acceptance of even genuine documents and they referred all consumers to some selected Notaries and they have to be paid anything between Rs 250 and Rs 400. Photo studios and  service providers for xerox Copies  made a killing apart from some middlemen who arrange false or genuine documents and help the masses to apply for AAdhar Cards. Easy money for many became an order adding to several other problems. The very idea of issuing Aadhar card was ill conceived and wrongly executed without studying the implications and the negative impacts on the society. The result is loss of Tax payers Money, loss of money for the aspirants, loss of stationery and loss of man hours and energy.Now UID is of no use and it has let loose legal entanglements in several cases.

Dr.T.V.Gopalakrishnan

This comment is published in Money Life.

Late Wisdom of the FM

Why this late wisdom? Who prevented him taking action against bringing black money and stopping generation of black money. He is quite, intelligent, imaginative and capable FM, but he prefered to miss the opportunity to please the high command perhaps and missed miserably the oportunity to become a hero of the nation and leader of the masses. This late wisdom cannot be of any use. The economy lost, the Government lost and finally the people lost their comfortable living. They have to now put up with rise in prices, all types of avoidable taxes and what not? The FM had the vision but did not have the will to action is what the present action indicates.

Dr.T.V.Gopalakrishnan

(This comment in Business Line is in response to the report India to Act tough apperaed on the 28th March)

Why this late wisdom when he has decided to keep himself away from politics and hand over the mantle to his son. As an inteeligent and imaginative FM he could have done a lot to the majority of masses and earned a name by enhancing the strength of the economy by bringing back the black money and putting the funds into productive uses.He has widened the gap between the Rich and the poor and helped the richto amss wealth. What he has finally achieved? He has incurred the wrath of the   He has incurred the wrath of the masses who include lower and middle class people. Except paying direct and indirect taxes and figting to survive the inflation people have no time for any peaceful and comfortable time is what the FM gave to the people.

Dr.T.V.Gopalakrishnan

(THis comment appeared in ET dated the 28th March).

Government should clarify what is meant by autonomy for RBI?

Declare RBI as Government Department? It is time Government  make it transparent what is meant by Autonomy for RBI? RBI's most of the vital functions including the monetary policies are carried out after consulting formally and informally the Government and the Government directly and indirectly exercises lot of control on RBI. The fact remains that RBI does not have even the power to update the pension of its own retired officials who survive on a pittance amount fixed in the 1990s is a reality and the Government has stopped the RBI Board in updating the pension and has been dilly dallying for more than a decade  avoiding  giving its approval. If the RBI gets merged with the Government, at least its employees who include  retired employees in particular can have a better compensation on par with  the Central Government and the Central Government can run the banking system the way it wants. 

Dr.T.V.Gopalakrishnan

(This comment is given in response to an article Bank license appeared in Business Standard dated 28/3/14)

Change in Mindset is the Key for Financial Inclusion

The article is very apt and to the point in highlighting that Financial Inclusion is not to raise deposits but to take  care of the entire banking needs of people which include granting credit facilities. “People , it is said , can be placed in three classes; the few who makes things happen, the many who watch things happen, and the overwhelming majority, who have no idea what has happened”. The bank officials in general and public sector bank officials in particular have to necessarily find their place in the first category as by any standard they enjoy all possible comforts one can think of in a developing economy and they are comparatively in a commanding position by means of resources and support they get from the authorities to be of great service to society. If they decide, Financial Inclusion is a reality, but alas the mindset is missing. The bank officials right from top to bottom can do a lot to improve the living conditions of masses and have the satisfaction of serving them in letter and spirit and providing the support system to give a big boost to the economic growth provided they get fully absorbed and involve themselves with commitment in the discharge of their responsibilities. The mandate for this has to come from within and for that everyone has to do an introspection to satisfy himself or herself as to whether justice has been done to the society which takes care of everyone’s need and to some extent greed also. Banks’ raw materials are basically money and people but they discriminate a lot, not by rule but rather by convention in their day to day business by not entertaining people of less means. This is a fact which cannot be ignored and this is exactly the reason for the financial inclusion not being a success despite persuasion, compulsion, motivation, incentives and encouragement. Why this reluctance and discrimination on the part of a bank official who deal with public deposits and authorities want financial inclusion by all means? There are millions of bank employees scattered throughout the length and breadth of the country and they are better placed to bring people of less means and less privileged under the banking fold. Employees have their own servants, iron wallahs, plumbers, electricians and contacts with all categories of people in a society right from pan wallas, fruit ,vegetable , flower vendors to Gold merchants without bank accounts.Many people like carpenters, dealers in scraps, waste materials, traders etc do not have bank accounts or do not operate the accounts even if some have. If employees turn their attention a little and no special effort is called for, millions of people can be brought under banking fold. All their contacts can be easily encashed and many can be brought under Financial Inclusion. The officials have to necessarily take financial inclusion as an opportunity to show humanism and at the same time help the needy to improve their lot and banks business. Through financial inclusion bank employees can provide life to many and this will the greatest satisfaction one can derive from service. KYC is a weapon to serve the customer better by understanding him and his requirements fully and not to kill him. Here the bank officials can perform better and add business to the bank. The present day banking is enjoying lot of freedom, products and advanced technology to improve business. Full understanding of Financial Inclusion and Know Your Customer norms offer excellent business opportunities and help the bank to comply with the authorities’ requirements. By adopting a human approach rather than being mechanical, even the NPA menace which has been growing like a cancer in the banking system can be tackled to a great extent. Mind should be devoted for service and service alone. Will the employees rise to the occasion and be more humane in their responsibilities to the society? By being humane, one derives great mental satisfaction and no money or compensation can achieve that? Reports on Financial Inclusion are many and they have not yielded any results is a fact. Will the article by Indira Rajaram be an eye opener.

Dr.T.V.Gopalakrishnan

Sale of NPAs by banks

Now the malls can have a separate wing to sell off bad loans of various banks and those interested can have them at Competitive Prices. There will be bank wise counters and they will proudly present their bad loans under various segments viz; Corporate loans, Institutional Loans, and retail loans etc. What a progress the economy has made?

Dr.T.V.Gopalakrishnan

(This comment appeared in ET dated 24/3/14 in respomnse to the news item Bank of India to sell NPAs)

Welfare ,masses and Religion

Very well articulated article which has reasoned out very well why Mr Akbar has joined the Modi bandwagon. Among the people, there is absolutely no animosity between the Hindus and Muslims and they happily coexist.Only certain political parties and their leaders create the wedge exploiting the sentiments and ignorance of many of the masses by bringing allegations without any solid backing and placing one religion against the other.Akbar deserves all kudos for this master piece and h .. 

Dr.T.V.Gopalakrishnan
(This comment is published in ET dated 24/3/14)

Writ offs in banks

Write off of loans benefit the borrowers,banks and their connections whereas, recovery results in loss to all these parties. The recoveries are to be shown in banks books as profit and these have to be shared among all stakeholders of banks and there are no personal gains. Write off of loans have personal gains and the loss is passed on to all stakeholders of banks starting from depositors. Poor tax payers also share the loss is perhaps not known to many and hence the write off of loans is not generally subjected to any detailed scrutiny. It is easy to loot the banks through managed write offs and this has been going on for decades unquestioned.

Dr.T.V.Gopalakrishnan

(This comment appeared in Business standard against the write up Public Sector Lenders write off loans more than the  cash discovery on 22/3/14)

Dy Governor Dr Chakraborty, RBI and Commercial Banks

He may have no differences with RBI but the fact remains that he has never identified himself with RBI and his contribution as a Central Banker is less than expected and he has raised his voice against RBI's policy openly.As in charge of Banking Supervision, he has not played his role effectively giving rise to deficit in Governance  in Commercial Banks and allowing NPAs to stagger beyond manageable levels. Banks as a transmission mechanism of RBI's monetary policy has weakened and the importance RBI was giving on skill and knowledge in banks was given a go bye.During his period in RBI, the health of banks has gone bad is a fact which cannot be challenged. This premature retirement is avoidable and this gives room for adverse comments.  

Dr.T.V.Gopalakrishnan

Is the economy ready to have an inflation targeting?

As long as RBI does not enjoy autonomy and is dictated by the Government it cannot have its own monetary policy objective. Further, in the context of the Country's socio-economic-political conditions remaining below at a reasonably acceptable level justifying the welfare of majority of masses, RBI cannot have an inflation targeting objective at the cost of economic growth, financial stability and monetary stability. The economy is not that matured to have even a trial on inflation targeting.

Dr.T.V.Gopalakrishnan
(This comment is in response to RBI has not yet moved to inflation targeting appeared in Business Standarddated 21/3/14). 

New Bank Licenses

If Corporates are excluded from grant of licenses, RBI's credibility and wisdom get a boost in the financial market and among the depositors. Corporates are known for their misdeeds and if they get bank licenses they will have access to easy unlimited source of funds through deposits which will be  finally diverted for building up their empire further at the cost of investment for developing the economy.The position of Prenationalisation era will be repeated and RBI will have to bear the brunt of disciplining them without any effect. Hope the news that Corporates would not get licenses will come true.

Dr.T.V.Gopalakrishnan

Comment in Business Standard

How long the loot can go on?

NPAs are becoming like any other commodity in the market for purchase and sale. Banks in collusion with borrowers generate NPAs and sell them in market or write it off. Depositors bear the brunt along with tax payers. The loot is made easy and goes often unnoticed and unquestioned.The accounting system and accountants and auditors help to fudge the accounts and depositors and other stake holders have no way of knowing it and challenging it.More than  Rs2 lakh Crores of rupees are identified as NPAs and unidentiified NPAs will be more than that.Since PSBs are not allowed  to have a run because of the backing of the Government and the flow of funds both from depositors and the Government in the form of capital induction using tax payers money cannot be stopped by any means,this problem of NPAs will continue to  plague the system unchallenged.The financial discipline expected of bankers and borrowers has been eluding for decades and the beneficiaries are politicians, borrowers with criminal back grounds, Board of directors of banks, their associates, auditors  and accountants. Unless and Until  a lasting solution to professionally contain NPAs on ethical lines and without any room for corruption and manipulation of accounts is introduced, the discipline will not come and the economy, depositors, good borrowers and the tax payers will bear the brunt of NPAS and the loot will go on.   

Dr.T.V.Gopalakrishnan

RBI needs to be cautious now.

This refers to your editorial Monetary Policy Dilemma ( Business Standard dated 18/3/14).It is too early to make a call by the Reserve Bank  on its present monetary  policy stance based on the Inflation index both CPI and WPI. The election is round the corner and the manipulation of supply side which is the major cause of inflation, to register a steep fall in food inflation cannot be  totally ruled out. In our econo-political system where monetary policy's role is only subservient to that of fiscal and administrative policies, the need for RBI to be abundantly cauttious to adjust its policies to the highly fluctacting inflation index is paramount and RBI cannot afford to faulter and alter its policy stance  as per the market sentiments.Better RBI maintains its Status quo till a new Government takes over and wait for its ideologies.      

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Dr.T.V.Gopalakrishnan

Is the banking sector reform possible in India?

What ever the author wants on Indian Banking is nothing but utopian thinking and nothing would happen.The Public Sector banks would never be privatised and the central bank would not force to let the bad ones fail.The need to have both PSBs and the Central Bank under the Government Control is paramount  as  the Government has soci-economic responsibilities linked to the political agenda and the fincial position of the Government is weak to allow banks and the Central Bank to run on professional lines.  Though the last banking sector reforms introduced in two stages in 1993 and 1998 have brought in lot of competition and standards of Governance on par with international standards, still the Government have no intention to allow the banks and the Central Bank to have their full freedom to run on professional lines as evidenced by merging the failed Global Trust Bank with the PSB bank Oriental Bank of Commerce. The central government and the Economy depend heavily on banks and their deposits for meeting the fiscal deficits, the reforms in banking as envisaged by the author cannot take place. The Central Bank is also not autonomous to have its own way of having reforms as the Intervention by the Government even in Micro management of banks is unstoppable.    

Dr.T.V.Gopalakrishnan

(This comment is given to Businness Standard in response to an article on Banking Sector reform dated 8/3/14).

Banks and Corporate Governance

The author has come out clearly as to how Corporate Governance principles are not being adhered to in PSUs particularly in PSBs sighting the example of United Bank of India and its recent revelations.The SEBI frames rules to be pursued to ensure Corporate Governance in Corporates but it seldom ensures adherence is a fact known to all Corporates and market players. Corporate Governance in Banks particularly in PSBs are only in paper and the Government Director and Chairman as dictated by the Government have their own principles of Governance where even RBI the sole regulator of banking has limited say.These shortcomings in the adherence to Corporate Governance rules are known to all but the connections, lobbying, contacts and other under currents in the actual functioning of the Corporates including banks have a destination not known to many.Fortunately banks are not allowed to fail thanks to Government backing using tax payers money as otherwise left to themselves many banks would have failed long back. The UBI was havibg severe problems and was categorised as weak bank along with other two PSBs in the late 1990s and all the three were saved with the strong backing of the Government. Corporate Governance and even other Governance Standards are missing in our system is a truth and ethics and values are concepts only to be found in discourses.

Dr.T.V.Gopalakrishnan

( This comment is in Money Life in response to an article UBI Saga exposes many warts on the 4th of March 2014).

Government and Ordinance

It is only an election stunt. Last ten years the Government did nothing to prevent corruption but now what is the hurry? People have already their assessment about this UPA Government and that cannot be changed with a last minute Ordinance. It can only boomerang.

Dr.T.V.Gopalakrishnan

(This is in response to the Opinion Poll in respect Anti Corruption Ordinance Bill in BL dated 2/3/14)