Make Customer Service Ratio as Part of RBI's evaluation of banks.

Like Capital adequacy ratio, there should be a ratio to analyse and  assess the level of service rendered by banks to customers based on certain parameters and this should form part of evaluation of banks by the Reserve Bank of India. Though the banks whether they are in the public or private sector  try to comply with all the regulatory requirements in adhering to KYC norms, the fact remains that bank officials do not appear to be sensitised to understand the customers and provide the service.needed by them.They are more concerned witth  the documents and not worried about the Customers, their requirements and banks own business perspective.  All are treated like cheats and rogues even if they are with the banks for decades and no irregularities have been observed in any manner in the conduct of their accounts. One has to literally fight with the officials on the rationale of transactions and even then they fail to carry out the transaction despite the customers agreement to the effect that  they are prepared to bear the risk if any and their deposits are with the banks with a general lien. Unfortunately some of the private secctor banks' staff are not even aware of the existene of an Ombudsman or a Regulator in the name of RBI and many times they express their ignorance by saying with all innocence that they have not seen such a bank in their vicinity. Whom to blame the banking Ombudsman, or the RBI or the Banks or the Customers? Pathetic state of affairs.

Dr.T.V.Gopalakrishnan

(A modified version of this comment is given to BS in response to an Article on BCBI to put customer srvc ratings of banks in public domain)

Expectations from India INC.

The PM expects a lot from India Inc.1) Run the industry on ethical lines2) Ensure that they do not default on bank borrowings3) Ensure that accounts are not manipulated 4) Do not lobby for favours 5) Ensure that they really contribute for the growth of the economy6) Ensure that  they do not nurture any greed to amass wealth exploiting the masses.6) Ensure that they pay all the taxes without fudging the accounts.7) Ensure that Corporate Social Responsibility is carried out in letter and spirit.

Dr.T.V.Gopalakrishnan 

(This comment is given in response to the news item Long List of Reforms What India Inc expects from Mr Modi)

The budget for 2014-15

The autor has given very valuable suggestions worth seriously considering by the Government. However, the thoughts are on routine lines and tinkering here and there with taxes, exemptions etc cannot be of an endurable nature to save the economy which requires out of the box thinking and very decisive actions. The very approach of the new government to tackle corruption and unearth black money if proved a success, the isssue of deficit financing for developmental needs will not arise. The structural reforms if aimed at can improve the savings and investments and the economy can expect to perform better to contain inflation and other serious issues faced by the economy. The capital market needs to be made a source of finance from household sector and capital formation from the retail investors. The dividend tax needs to be revisted and STT should emerge as a major tool to raise resources, prevent speculation and to regulate the capital market in a healthy manner.

Dr.T.V.Gopalakrishnan
(This comment is in response to the article let us get real to the Budget that appeared in BL dated 26/6/14).

Coordination is the need of the hour to bring down food inflation.

Nabard is the best medium to coordinate the centre and state in the matter. NABARD has a key role to play to develop not only agriculture and rural development, but also has to ensure that the supply chain which is the major cause for food  inflation improves.The Local Boards of the Reserve Bank of India can also be made for effective and accountable for improving the agriculture and rural sector by ensuring coordinated activities with all Central and state Level agencies involved in agriculture and allied activities with the active involvement of NABARD. If the institutions themselves do not show any enthusiasm and initiative to improve the economy, the continuance or otherwise of the institutions should be taken up for a serious review. 

Dr.T.V.Gopalakrishnan

( This comment is given in TOI in response to a report  that PM wants Centre and States to Coordinate to bring down inflation). 

Perceptions vary from person to person

This is a very clear evidence that perceptions will vary from person to person.What Dr Rajan has expressed is his concern on certain regulatory aspects where the RBI should have a full say and should be a final authority. Dr Rajan can never be different from the thinking that the the financial services system needs reforms and he has been taking all possible steps towards reforming the financial system perhaps without making any pomp and show of it with all his limitations.One major handicap for him is that RBI has autonomy only on paper and the FSLRC report wants to even take away this autonomy.

Dr.T.V.Gopalakrishnan

(This comment is given in ET dated 26/6/14 in resposnse to an article Dr rajan is wrong) 

Is there any hope for Relief for RBI Retirees?

IT IS A MATTER FOR SHOCK why the Retired RBI employees have been taken to task at once both by the Government and RBI Management by DENYING THEM their entitled periodical updation of pension on par with the Central Government pensioners.THIS is a mystery since there has been a tacit understanding to that effect. The EGO of some Government official has played havoc with the life of many a retired employees and their dependants and RBI management has not shown any  guts to sort out the issues and has been dilly dallying for more than a decade. RBI has the money and  the authority to grant the updation but it prefers to remain silent  and dance to the tune of the MoF for reasons unknown to the retirees but  perhaps well known only to  the top management. After the departure of Dr Jalan, two Governors have come and gone and they had very diplomatically side tracked the issue not showing any magnanimity in understanding the genuine concerns of retired officials and their pathetic living conditions for want of adequate pension and medical facilities. How the management and the Government can afford to be so casual, inconsiderate and insensitive to the genuine needs of the retirees when both can financially afford to meet the very genuine, reasonable and fully justifiable demands a pittance in moneatry terms, is what is surprising and is not understood?  THAT Spiralling and Persisting high inflation has not spared RBI retirees is a fact that cannot be wished or washed away.RBI does not depend on the Government for any financial support to meet the rightful needs of its retirees who are in their eighties and many from the lot have left for heavenly abode after having anxiously waited on the promises of the management that their needs would be met.

The Reserve Bank being an institution of international repute and having been a role model for Central banks of many countries in the world and domestic institutions as well cannot and should not forget and ignore the retirees who had toiled and contributed their best professionally and ethically to build its reputation, name,fame and the image it enjoys. The Human Resources   present or past who form the base for any institution or the nation for that matter cannot be so easily bypassed just because of the reason that they have no strength to fight the arrogance of the power. It can’t stand ethically, morally, socially or humanely. Justice demands that justice cannot be further delayed and retirees deserve to be given their dues at the earliest as per the agreement the Management had with the Retired Employees Association way back in 1990.

Dr.T.V.Gopalakrishnan

Make capital out of Capital Market

Make Capital out of Capital Market. Do not allow Dalal Street go the Wall Street Way

The capital market which has undergone sea changes under the initiative of SEBI over a period has been unfortunately turning out to be a den for speculation and gambling keeping away the retailers from investing and helping the capital formation very vitally needed for reviving the sagging economy. The financial savings of the households have, of late, been registering a sharp decline and the investments in physical assets have been on the increase contributing nothing to the GDP growth. For want of adequate resources, the development of infrastructure has lagged behind and the confidence in the whole gamut of savings, investment and production has shattered. The household savings in financial assets have come down sharply over a period. Retailers’ investment in capital market is insignificant if not negligible. The trend in resources mobilized over a three year period by the Corporate Sector can be gauged from the following table.

Total Resources mobilized by Corporate Sector                                             Amount in Rs crores)              

Year	Equity Issues	Debt Issues	Total Resources
2010-2011	1,14,466	2,28,236	3,42,702
2011-2012	40,729	2,96,868	3,37,597
2012-2013	78,408	3,78,444	4,56,852
2013-2014	73,394	3,18,436	3,91,830

Source: SEBI bulletin May 2014

The capital market which should reflect the strength of the economy in fact reflects predominantly the speculative tendencies based on the sentiments of a few market participants. Unfortunately the FIIS have more say in the capital market than the domestic players and they dictate the terms and conditions. The fundamentals of the economy which should be the yardstick to influence the market have been relegated to the background and the movement of indices is only reflective of movement of inflows of speculative funds of FIIS. The macro economic factors like the fiscal deficit, current account deficit, the GDP growth, inflation, value of the rupee, industrial and agricultural production etc are all weak and by any stretch of imagination one cannot explain  as to how the market indices are getting strong day by day other than by the speculative instincts. No doubt the change of the non performing Government and expectation of high Governance standards from the new set up partly account for rise in index, but it is too early to sit on judgment on Government's performance. This speculative trend seen in the capital market needs to be reversed and this is possible only if domestic institutions and corporates strengthen their resource base by tapping the domestic savings through attractive financial products including equities and bonds.

It is the best opportune moment for the new government to come out with some innovative ideas and facilities to enhance, convert and divert the household savings into investments in capital market. The investments in shares through IPOs have turned out to be a very bad experience for retailers during the last decade because of high and greedy pricing of the issues and they have burnt their fingers forcing them to go out of the market and seeking greener pastures elsewhere. Persisting high inflation has added fuel to fire. Gold and real estate have attracted huge investments over a period depleting the savings in banks and investments all around. The Rajiv Gandhi equity investment scheme introduced by the then Government offering tax exemption up to Rs 50000 investments in equity to attract retailers into the capital market has not gone well with the investors and this needs to be scrapped totally or modified drastically. Expecting people in small cities and suburbs who have absolutely no knowledge of shares and for whom having a bank account itself is a herculean task in these days of banks' insistence of KYC without understanding its' relevance, to invest in equities and that too through a demat account which is compulsory to hold the equity investment is simply unrealistic and if not totally utopian. When the Financial Inclusion particularly banking inclusion has not taken off very well, the expectation of the Government to attract savers particularly those from middle income and lower income class to equity market is unintelligible and unrealistic.     

To make the capital market a place for large savings, SEBI has to necessarily ensure that the share of retailers get augmented considerably keeping an obligatory minimum of 25% of the paid up capital of all listed companies. The companies that have exceeded this minimum and have been having more than 50% should get some special recognition from the Government and incentives. Till the Companies reach 25% of retail ownership, there should not be any STT for first time buyers of shares of these companies. To avoid undue speculation in the market, the SEBI can think of introducing loyalty bonus for retention of shares by individuals for more than a prescribed minimum period. STT can also be suitably modified to prevent speculation both on buying and selling. STT can be different for FIIS and domestic players in the market. Similarly STT can also vary for institutions and individuals. Different slabs can also be thought of for levying STT on purchases and sales. With proper modification and intelligent marketing, this can emerge as a regulatory tool to attract small savers to capital market, contain speculation in the market, mobilize maximum savings towards capital formation and enhance optimum revenues to the Government.

Corporates declaring dividends and bonus shares at regular intervals need to be incentivized. Similarly Corporates raising resources from rural and semi urban areas can also be given some tax concessions or some incentives. This will give a boost to tap household savings from these places. Domestic financial and other institutions investing in capital market and raising resources from capital market have to be facilitated with suitable products and processes   to get in and get out of the market and there should be in place effective regulation and supervision with adequate checks and balances to prevent frauds and irregularities.

The capital market is the best source of raising resources for the Government at this critical juncture and the money locked in the form of gold, real estate, hard cash and otherwise also can be easily tapped   with proper reforms in the form of policies, products and processes. Readiness on the part of the authorities is all that matters. A healthy and vibrant capital market supported by sound and proactive administration, regulation and supervision can change the economy into a most promising and prosperous one fulfilling the aspirations of the new Government and the people of this great nation.

Dr.T.V.Gopalakrishnan 

(This article has been sent to MOF for consideration in the ensuing budget).                                                                                                                         

Bank's Board is not above board.

How to empower the Banks' Board? The Government's nominees have their own agenda. The RBI nominee can be easily silenced by the Government Nominee. Other Directors are there at the mercy of the Government's and RBI's nominees. Chairman is always at the disposal of all Directors. Besides these, the political masters have their own agenda through all Directors. Persons without any proven caliber get into the Board through contacts and all sorts of influence. Being PSBs, accountability is seldom fixed. RBI has an inspection and its findings are mostly on the analysis of balance sheets which is always fudged using all possible  accounting gimmicks with the help of Chartered Accountants and auditors.Board is not above Board is a fact known to both the Government and the RBI. The tax payers and depositors have no say in the appointment of Board of directors and they generally bear the brunt. Board of directors and indisciplined borrwers enjoy merrily. The game goes on. 

Dr.T.V.Gopalakrishnan 

(This comment is given in response to an article on the subjet in Business Standard).

International Movement of funds and terrorsim

The need to kill terrorism throughout the world is essential but to kill trade and commerce and the growing international financial system in the garb of preventing money laundering and combating financing of terrorism is neither desirable nor advisable. Many countries including the poor have become members of Financial Action Task Force and have been putting the best of efforts to comply with its guidelines to contain source of finance to terrorism and improve their economic relations internationally is a fact. The concept of know your Customers adopted by banks has been affecting their business prospects and making financial inclusion particularly banking inclusion is becoming a distant dream in India at least. The globalisation of economies has been a reality for the past few years and this cannot be and should not be shot down by too much of regulation in international movement of funds. The approach to contain financing terrorism presently in vogue needs a review and there should be alternatives to prevent terrorism perhaps with more of administrative mechanism, political weapons, improved statesmanship and diplomacy. Terrorism should vanish and international trade and Commerce should grow under a very sound financial system for a better living.  

Dr.T.V.Gopalakrishnan   

Finding money should not be a problem for the FM.

Money is not short in India. Only thing is Mr Jaitley has to be very strong in taking some harsh decisions to get the cash in Government kitty. Money is in the form of GOLD, HARD CASH, REAL ESTATE, FLATS, FARM LANDS AND COMMODITIES. Mr Jaitley has to find ways and means to convert these assets into cash. One way is to go in for a Gold Bank. Another way is to go in for a Infrstructure Bond offering some good incentives to convert hard cash into bonds. The other ways are  to disinvest PSU shares and bring a law to the effect that no one can own more than one or two flats. The real esate market is becoming a speculative market like share market. The FM has to find some ways to contain speculative investments in real estate which should not be that difficult. Use Information Technology to build up data base to sort out speculative investments and bring some ordinance to prevent the same. Introduce dividend tax above a cut off limit. Those earning dividends in thousands of crores have a moral responsibility to come to the rescue of the nation and they should be compelled to share their wealth as a temporary loan to the Government free of interest  or pay a portion of the dividend as cess to build the economy. Money can be easily found more than what is required.by Mr Jaitley. Readiness to act by the Government is all that matters.

Dr.T.V.Gopalakrishnan

(This comment is in response to SA Iyer's Article appeared in TOI dated 15/6/14).

Be Ready and Achieve the targets set for nation with ease.

The President's address has touched upon almost all areas where the Government needs to focus and put on efforts to achieve them. Inflation, education, employment, economic growth through infrastructure development, agriculture and industrial growth, and women empowerment are all very vital  for the nation to progress. The task is daunting but the readiness with which the New Government has assumed the control and power can definitely make the targets within its to reach  with the active cooperation of the people, commitment of the bureaucracy and full involvement of farmers, industrialists, educationists, reformers, legal luminaries, administrators.We have ample human resources and adequate financial resources but to bring them together and make them perform is the job of the Government. Plenty of finance is available in the country in different forms like, gold, real estate, black money, wastages, inefficiencies and non performing assets spread over through out the country apart from banks. A little effort with force and incentives can convert these assets into productive assets and achieve what ever has been included in the presidential address over a period. The need to make people think, elect good  leaders and make them accountable for all their actions, good and bad contributions is paramount and people should learn to monitor the performance of the leaders, institutions, economy and generation, generation of wealth and their equitable distribution ensuring welfare of all. Readiness is all that matters. After all life is to experience, enjoy and enthral with the wonders of the energies,  universal and eternal truths. 

Loka Samastha Sukhino Bhavanthu. 

Dr.T.V.Gopalakrishnan

(This comment has been sent to Business Standard ).

Write off of loans and offer of freebies

The message of the article to all political leaders in general and to Mr Modi in particular that offering of freebies and writing off ofbank loans takes away the Governance standards and it is neither good for the economy nor for the people. Banks' money belongs to  depositors and no politician has the right to write off of  the loans. These write offs  again are carried out at the additional cost to the tax payers money which come in the form of recapitalisation of banks. This sort of approach of the politicians is encouraging bad discipline and it should be condemned by all. This is nothing but very bad Governance and definitely not in alignment with Mr Modis's thinking, propaganda and philosophy. This sort of loans write offs in early 1990s and 2010s by the Central government and by Some State governments, Maharashtra ,Haryana etc though were severely objected to openly and privately by the previous successive Governors of the Resereve Bank, politicians however,  ignored them and the write off of  loans and generation of bad loans in anticipation of possible write off offers from the politicians have become the order of the day. The general discipline expected from borrowers has been on the decline. and bad loans have on the increase affecting the interest rate, inflation, growth of the economy etc.  This culture of offering freebies and write off of loans taken from banks need to be banned politically and Mr Modi alone can bring in such a transformation. This article should be an eye opener for that. 

Dr.T.V.Gopalakrishnan

(This comment is in response to SAIyer's article on Times of India).

LPG subsidy transfer scheme

The subsidy transfer scheme is not advisable and desirable. It can at best be extended to the poorest of the poor and that too based on accurate information on the number of poor people and without leaving any scope for looting the intended transfer of money by any middlemen by fraudulent means. The price of LPG should be made reasonable and affordable for all segments of society and its distribution should be made corruption free and without any manipulation. The dealers need to be effectively supervised and any body indulging in mal practices should be mercilessly dealt with. There needs an effective administration.

Dr.T.V.Gopalakrishnan

(This comment appeared in Business Line dated.6/6/2014).

Planning needs accurate data base

Planning is sinequa non for any economy to progress , But the essence of planning is to have adequate data base to project the future and aim at achieving the projections with convincing policies and their executions with intensive monitoring, supervision and follow up. The money spent on planning should not go waste as has happened all these years with planning commission. The build up of accurate data on employment, creation of productive assets, distribution of income,etc needs special attention and effort and optimum use of IT resources to cature data has to be ensured. The planning without accurate data on important parameters is akin to draw picture on water and wasting the resources for nothing.

Dr.T.V.Gopalakrishnan
(This comment appeared in Business Line dated 2/6/14)

Window Dressing of BS to bring down NPAs in March

Unless there is a trade off betwen Banks management and Audtors, the NPAs of banks cannot improve in March as nothing has changed either in the economy or in banks.If at all there is some improvement it may be that, more loan accounts would have been restructured or more write offs would have been effected or fresh loans would have been released to evergreen the accounts to keep the NPAs down, Generally banks resort to window dressing of balance sheet and Profit and Loss account in March and they arrive at some presentable figures in respect of NPAs, profit, deposits and advances. This is done with the full knowledge of top management of banks and auditors seldom object to it. March end figures should never be taken as a criteria to assess the performance of banks as long as Auditors and Top management act hand in glove with each other. Dr.T.V.Gopalakrishnan (This comment appeared in Business Line dated 20/14).