Push Financial Inclusion, Fast

Apropos your editorial on Financial Inclusion from RBI (ET dated 31/12/2015), the Mohanti Committee on Financial Inclusion has done its best to make the Financial Inclusion  a reality by bringing families including girl children particularly from the rural and agricultural segment under some institution or other engaged in the field of Finance. The highlight of the report is perhaps the thrust given to link Aadhar Card with the subsidy distribution  through the fast spreading mobile usage with an intention to cut graft, reach of cash subsidy to all without leakage and loss of time.  As rightly observed the approach to   enhance the much needed interconnectedness of popular access to formal Finance with the Institutions and practices relating to the real economy, Land records, agricultural subsidy and the tax treatment of securitization vehicles is really commendable. The coordinated approach from all institutions engaged in Financial Inclusion utilizing the services of Business correspondents along with a thrust to improve Financial Literacy would definitely go a long way in achieving the inclusive growth and improving the rural environment to attract investment, agricultural production and distribution of wealth in an equitable manner. As is said the taste of pudding is in eating the success of Financial Inclusion depends on the implementation of the Committee’s recommendations in letter and spirit  which essentially calls for a mindset to fulfill the aspirations of poor segment of the population.

T V Gopalakrihnan  

(Modified version of this letter is published in ET dated 1/1/2016 )      

Make the Institutions strong Independent and accountable

Apropos your editorial a wake up call for our Political Leaders (ET dated 28/12/2015),

It may be observed that major institutions of the country do not enjoy autonomy is a fact and  unfortunately the Political Masters seldom exhibit  the wisdom to initiate action to  make them strong and accountable.

The need to have a strong healthy, sound and Vibrant financial system to put the economy on the fast growth track is paramount and the fact that the financial system   which is the backbone of the economy has stresses and strains due to poor health of both banks and their borrowers does not augur well for any of the stake holders of the economy. The Reserve Bank as the regulator and supervisor of banks has no full autonomy in practice to effectively control the banks because of Government’s interference on various policy issues and the appointment of Board of directors particularly in Public Sector Banks. Similarly the SEBI which Controls the corporate borrowers has its own limitations to discipline them all, the way the banks and the Reserve Bank desires. The Governance standards in the country by and large are weak and the Institutions which do not enjoy full autonomy have lots of escape routes for being not accountable for any of the lapses seen and felt in the financial system. Since the ultimate sufferers on account of lack of autonomy for these vital Institutions are the economy, the Government, depositors tax payers, banks, large Corporate borrowers and the people at large it is time our political masters realize the seriousness of the issues and provide the much needed legislative and Government support to make the Institutions strong and independent to discharge their allotted functions effectively and make them accountable. The major beneficiary will be the politicians themselves indeed.

T V Gopalakrishnan

Sustianble Finacial Stability is the need of the hour.

The so called financial stability is not that easy to  be achieved as long as the public sector banks continue to slog with the problems of bad debts and the borrowers continue to grapple with the slow growth, lack of investments and evasive ease of doing business.The Indra Dhanush approach to solve the problems of PSBs will not be of any use as long as the borrowers are not allowed to be disciplined both by the banks and RBI  because of direct and indirect interference from the Government  and the cross subsidisation of the banks ' losses by the tax payers and the depositors among the other stake holders exists.. The Government should ensure that the banks are highly professional and their credit portfolios are run strongly with the business and commercial approach and for that RBI should have a free hand..Banks cannot be expected to be run only with the depositors and tax payers support backed by the Governments unlimited guarantee. Their business is lending and  not investing in Government and other safe and unsafe  securities. Investments are part of their commercial approach and the investment climate should be congenial. The Credit market and bond market are weak and with this back ground the expectation of a sustainable Financial stability would be a far cry. The capital market dominated by investments from PSUs,and other institutions also is weak and this also needs a total revamp by attracting maximum retail investors at least a minimum of 51%  of the paid up capital of Listed Companies. The Credit rating of Companies should be done by banks based on their conduct of loan accounts.among other things.  The recycling of funds in banks is weak and unless they are able to have fast churn out of funds which is dependent on the repayments and recoveries of loans, banks cannot be expected to have a healthy balance sheets. The economy can be said to be strong  and fast growing only if its Financial system consisting of markets, institutions and instruments (they bring out in the market for mobilising funds, deploying them and liquidating the instruments freely ) is sound, dynamic, stable and vibrant.  

Dr T V Gopalakrishnan    

(this comment is sent to Business Standard)

Accept the ground reality of Financial Stability

The observation that While bad news about banks can be hidden, bad news about borrowers is visible to all is totally wrong. The bad news of both the banks and the borrowers are hidden by the ingenuity of the accountants and auditors from everybody is the truth as accounts are liberally fudged and balance sheets and Profit and loss accounts are conveniently window dressed to suit the requirements of those who read them except perhaps by the  retail share holderswho lose their investments for ever.What the system permits, follows and practice is accounting for convenience and not for exhibitig the true sate of affairs .Examples are Global Trust Bank and Satyam Computers. There are others like Air India , King Fisher like that. The story is slightly different in PSBs as they enjoy unlimited government guarantee and enjoy the depositors and tax payers support perennially though not out of smpathy but out of inevitable compulsions. Finanscial Stability would be a far cry as long as banks , privilged Corporate borrowers in particular are not disciplined by certain inbuilt mechanism and the accountants and auditors are not made accounatle for all their known lapses in presenting the correct state of affairs.

RBI is also unfortunately helpless in setting right the situation  except perhaps making some noises here and there when the situation is reaching some dangerous levels. 

Dr T V  Gopalakrishnan

(This comment in a modified manner appeared in Business standard dated 25/12/2015)

Transparency, RBI and RTI Act.

This refers to the Editorial ‘Why Turn the RTI heat on the RBI (ET dated 18/12/15). The Supreme Court’s ruling that the RBI should disclose the names of defaulters to people seeking such information under RTI Act though strengthens the RTI Act but definitely weakens the RBI Act, 1934 and BR Act 1949 in terms of which RBI has a role and responsibility to protect the interests of depositors who hold their hard earned savings in banks and provide the economy the badly needed capital support. While the need to maintain the health of banks by containing the bad debts formation is paramount and undisputed, and from this angle the staggering growth in the number of defaulters in banks is a cause for worry demanding stringent action both on banks and RBI as a Regulator and Supervisor of banks, but  the solution definitely does not lie in making the RBI weak and   compelling it  to make its Inspection Reports and other findings to public on demand  as such an action  will have  other consequences on the running of banks and maintaining financial stability which is very essential to support the growth and the development of the Economy and its Financial system. By and large RBI has been very fair and competent in discharging its responsibilities is a widely and worldly recognized fact and the weakening of banks particularly Public Sector banks if at all happens is apparently due to various extraneous factors which perhaps can be sought under RTI instead of the names of defaulters which are any way available with Credit Information Bureau (India) Ltd.. The Public Sector Banks’ Boards like Cooperative Banks' Board are weak and non professional and they are technically under the dual control of both the Government and RBI which is the major cause for all their weaknesses and definitely how they are made weak can be sought from RBI under RTI act instead of seeking for the details of defaulters. .           

Dr T V Gopalakrishnan)

( Comment sent to ET )

RBI is not at fault

With reference to the editorial, "RBI must give clear guidance on rates" (December 23), the transmission ofmonetary policy and its influence on the rates of interest in the market seldom take place due to inherent and historical weaknesses in the banking system. This cannot be attributed to the Reserve Bank of India's perceived lack of clarity on policy rate guidance and communication to the banks on the need to transfer the benefits of rate cuts to borrowers.

Price stability has always been the core objective of the RBI's monetary policy. Of late, this has been well articulated in the form of an inflation target among other things, and presented to banks to adhere to. While the need to reduce the interest rate and cost of funds is paramount to boost investment and growth, banks are not in a position to cut the interest rate due to some compulsions. These pertain to maintenance of high net interest margin of around three per cent - unheard of in advanced countries - and lack of professionalism in the overall conduct of business, taking into account the dynamics of both domestic and foreign markets that have a bearing on their profitability and availability of automatic cross subsidisation of losses by depositors, the government and other stakeholders.

As the current base rate is not based on a scientific calculation and is far from being aligned with the Wholesale Price Index and the Consumer Price Index, banks have the excuse to not fully transmit the RBI policy rate because the dynamism expected of them is practically absent and they have not graduated to adopt the modern and scientific calculations of various parameters. From this angle, the RBI's proposal of marginal cost of funds-based lending rate is an intelligent one. Over time, banks would be compelled to turn professional to remain in business.

A beginning has to be made somewhere. Perhaps the marginal cost approach to lending can become the game changer. Banks may have no option but to fall in line to comply with the transmission of monetary policy in letter and spirit.

T V Gopalakrishnan Bengaluru

(This appeared in Business standard dated 25/12/2015).

Banks and Marginal Cost of Funds

The transmission of monetary policy and its influence on the rates of interests in the market seldom happen due to certain inherent weaknesses in the banking system and unless and until they are removed, RBI cannot expect its monetary policy to be as efficient as envisaged. There is a paramount need to reduce the interest rates of bank loans and reduce the cost of funds in the economy to boost investment and production, but the fact remains that banks are not in a position to effect any reduction in interest rates due to some compelling reasons. Their Net Interest Margin hovers around 3% which they do not want to touch what ever may be the compulsions. Historically, banks get subsidized by depositors and the government and the borrowers get subsidized by all stake holders.  Since the base rate presently in vogue is not based on a scientific calculation, its alignment with Whole Sale Price Index and Consumer Price Index is a far cry. In such a scenario, the Public Sector Banks cannot pass on the monetary policy changes as the dynamism expected of them is missing and from this angle the approach to marginal cost of funds is really good and appreciable and perhaps over a period the banks may be compelled to accept professionalism to come out of their weaknesses and remain in business in a healthy and dynamic manner. Some beginning has to be made some where and perhaps the marginal cost approach conceived by the Reserve Bank now can be the game changer. This is an intelligent move and the banks will have to come around to comply with the transmission of monetary policy in letter and spirit over a period.

The assumptions behind the proposed guidelines that the rates of interests on various categories of deposit are true and reflect the correct position of actual costs cannot stand scrutiny on scientific lines. The rates of interest offered on Savings Bank deposits and other deposits (though historic) are arrived at on a realistic basis cannot be true as these rates do not reflect all the costs on an on ongoing basis and there are several inbuilt costs which cannot be defined, identified and arrived at easily. Besides the unhealthy competition among the  banks compels them to offer rates which cannot be entirely based on actual costs. The NRI deposits rates and the whole sale deposits rates are based on competition, undercutting, and the concessions offered on the advances rates and cash expenditures by way of incentives and other forms to mobilize the deposits. The banks incur several costs on  fast fluctuating fixed and variable nature and their true position which should be reflecting in the cost of funds i.e. deposits and borrowings is not reflecting is a ground reality. The major example is the SB rate of interest. The banks seldom change the SB rates of interest what ever may be the changes in the overall costs is a known factor as despite deregulating the SB interest rate in the year 2011, the rate has not changed in any of the PSBs. There is absolutely no correlation between the real rate of return, inflation, and the rate of interest on deposits. The equity capital which is comparatively cheap subsidizes   the rate of deposit to a great extent and this does not get into the calculation of cost of deposit at least once in a while in our banking system. Similarly the banks incur lot of expenditures in maintaining cash balances other than  CRR balances with RBI and carrying heavy accumulated bad debts  which do not appear to have been given any weight age in arriving at the marginal cost of funds although it may appear to be there under unallocated expenditures. But the banks in reality do not have any such calculation to fix the base rate as it is always linked to the NIM in practice.

 The one issue which cannot be ignored today is that 38% of the term deposits are for a maturity of one year or less as per source of funds mentioned in the notification. If we add 7% of Current Deposits and 21 % of Savings bank deposits, the total deposits of tenor one year and less would work out to 66%. A deeper study will bring out the distortion that the profile of deposits is still skewed towards short term, whole sale and high cost deposits. If one studies the Liquidity Risk in the Risk Profile Templates submitted to the Supervisory Committee on Risk Management of the Board of Directors of Public Sector Banks, this aberration would be clearly visible. The bodies offering such deposits do lot of arm twisting of bank officials and instances are not rare where the latter have succumbed to paying as high a rate as 11% for short term deposits when “aamaadmi” is paid lower rates for deposits of the same tenor. Banks do incur other hidden costs as well to get these short term and whole sale deposits. It is felt that such opaque aberrations only derailed the recommendations of the Mohanti Committee Group on base rate. The situation would not improve if the concept of marginal cost is introduced unless measures are in place to capture all the actual costs to mobiles the deposits. It would therefore be desirable to evolve a system to factor into all costs  and then  go in for the weighted average cost of all deposits up to and including one year instead of card interest rate of retail and whole sale deposits.

The cost on borrowings also needs to take into account domestic borrowings cost and external borrowings cost separately as the composition between the two varies and the complexities differ. While the cost on domestic borrowings can be easily compiled, the cost on external borrowings can vary inter-alia depending on the Exchange rate and Libor fluctuations. It is doubtful as to whether all our banks have graduated themselves to have an assessment of the volatilities in the markets and factor them into the calculations while arriving at the cost of raising both deposits and borrowings.

The other point that should be considered is the negative carry in CRR and SLR, which again may tamper transparency for the ordinary borrower trying to understand the intricacies of how his lending rate is fixed. A study could be made on the impact of 7 % Current Deposits having no interest cost and 21% of Savings bank deposits where the effective cost to the banks is less than 3% and whether or not it will match the negative carry on CRR and SLR.

The inherent weaknesses which need to be recognized and minimized if not totally eliminated from the banking system to get an actual marginal cost broadly relate to preferred and favored credits, administered rates of interests for certain categories, write off of loans under political compulsions and otherwise  based on contacts, influence and interference from various corners, lack of understanding the concept of monetary policy and its objectives particularly at operational levels, fudging  and window dressing of balance sheets with the active involvement of top managements and auditors, general laxity in the professionalism in the conduct of Asset- Liability and risks management, regulatory forbearance and supervisory relaxations taken for granted and the human resources management with adaptability to the technological changes to ensure efficient customer service taking into account the external factors of competition in the whole business of banking. This definitely calls for an immediate, careful and very serious consideration so that the banking becomes responsive and sensitive to changes in monetary policy. The presence of Payment banks now licensed and small banks in the offing may again change the landscape making the position extremely difficult for PSBs in particular to be in a healthy business environment.    

Thus Base rates should be fixed on the basis of:

1)Weighted average cost of all deposits arrived more or less on a dynamic basis and of tenor one year and less.

2)Unallocatable overhead cost with transparency and justification

3)Average return on net worth with transparency

4) without  having any linkage with the NIM already fixed.

Lending costs charged by banks to borrowers should be fixed on the basis of:

1Base rate

2Product specific Operating cost

3Credit risk premium and

4Tenor premium

Basically, base rate should reflect the actual cost of funds, the risk margin and the rate of return to the bank but its sanctity lies exactly in arriving at the exact cost of funds and the transparency in its computation and application. The computation of base rate is expected to be on a uniform basis and apparently it leaves no scope for manipulation to be fair to the borrowers .NIM should be the end result based on operations and efficiency of the management.

Dr T .V.Gopalakrishnan

Discipline both the banks and borrowers to bring down NPAs

If a borrower is having multiple banks and the borrower is classified as non performing by one bank, it is essential that all banks should treat the borrower as an Non performing. This will enable to bring in discipline on the part of the borrower and helps all banks to recover the interests and part of the principal amounts. The ultimate problem in respect of bad debts is that both the banks and the borrowers do not act professionally and treat the borrowed funds as Depositors money and need to be fully accounted for.Indiscipline is the crux of the matter and it should be dealt with appropriately. The approach to get the loss on account of NPAs suffered by banks subsidised by the innocent stake holders of banks ie depositors and shareholders who incidentally include tax payers needs to be discouraged and the loss should be made good by banks and borrowers for their failure in conducting the loan portfolio.The accounts often turn into NPAs because of failure of banks in extending timely credit support, in not properly monitoring the accounts etc and to set right this, the banks also needs to be penalized by forcing them to make additional provisions. From this angle the present policy is an excellent move.

Dr T V Gopalakrishnan

RBI and RTI Act.

The Supreme Court's ruling to make the Reserve Bank to provide information under RTI Act without reservations weakens RBI,  RBI Act 1934, BR Act 1949 and does not serve any purpose particularly in understanding the weaknesses in the Regulation and Supervision of banks and the reasons behind ever increasing bad debts of banks particularly in the Public Sector Banks. The Reserve Bank has a unique role and responsibility in maintaining the stability of the Financial system and the  rupee value which essentially calls for the continued maintenance of trusts among the saving community in the banking and financial system. While the need to have the details of all defaulting borrowers is understandable and this in fact is available with the CIBIL, why the RBI should disclose the names and  findings of Inspection reports is not understandable.Many of the borrowers turn bad and the reasons if any for such a state of affairs are the requirements under RTI act, the banks and the Government Directors on the Banks Boards who are having the information can be compelled to disclose the information under RTI Act. The RBI can at best be asked to provide as to why the credit portfolio is becoming weak and the role of banks Boards and the role of Government and other individual nominees in weakening the credit portfolio.

Dr T V Gopalakrishnan

bad debts will continue to haunt,

• The intention of RBI in introducing Marginal Cost based lending rate instead of the base rate now in vogue is to make the banks effectively transmit the monetary policy objectives and reduce the rates of interest on loans, but the banks and borrowers particularly the bad ones know how to hoodwink and continue to do what they have been doing in maintaining very high interest rate margin, lowering the deposit rates, favouring the borrowers they want and exploiting the innocent and quality borrowers. The man made bad debts problems will continue to haunt  unless and until the RBI the banks and the Government take stringent disciplinary action against erring defaulters,
• 
  
• 
  

Regulate Ola and Uber and Improve public Transport

Ola and Uber are major cheats to enter the market and there is no semblance of any ethics in their business models. They charge three to four times at peak hours and are  taking advantage of the helplessness of travellers at some critical times . The weakness of administration is the reason for that. If administration can improve public transportation system and ensure auto to run as per meter and for any distance, the traffic  on the roads would drastically come down and the competition for such cheats can be severe to tame them down.  Ola and Uber are organised cheats in the merket and earlier they are controlled and effectively regulated, the better for the people and the country. It is a whole sale racket and needs to be watched. 

Dr T V Gopalakrishnan  

Is it not the responsibility of IRDA to protect the Insured?

Why Insured should look into such fine prints when IRDA can be an effective regulator and take care of the insured. The Insurance area itself is a fraud prone area and people are always taken for a ride. Doing business ignoring ethics and values has become the order of the day and the insurance companies whether they deal in life or other insurance are outsmarting all other businesses in taking the people for a ride. Even the educated and well informed people are duped by the insurance Companies and many silently suffer .Many are fighting endlessly to get justice. It is time IRDA conducts some surveys and get enough feed back on the need to be more effective in regulating the insurance companies.

Thiscomment appeared in Financial express dated 7/12/2015)

Why Retirees are made to suffer?

'RBI pensioners are the worst affected as the bureaucrats and the Government for reasons best known to them and definitely not justifiable from a humanitarian angle have stopped the updation of pension although there has been an agreement to revise the pension at periodical intervals to compensate for the galloping inflation and ever increasing cost of living. RBI is perhaps one among the very few institutions where corruption is unheard of, human resources show high standards of professionalism and commitment to work to get both national and international accalim.The pension updation has been stalled despite RBI not depending on the Government to meet the expenditure which is a pittance of the profit transferred to the Government every year.'' Dr T V Gopalakrishnan

The pathetic condition of RBI and the employees

This mass casual leave by the employees of RBI definitely could have been avoided had the Government been a little sensitive and and had acted responsibly understanding the need to have an independent Central Bank to ensure a very sound and strong  financial system very badly needed for the healthy and sustainable development of the economy.There is no room for politicization of this great and giant institution which has earned a name and reputation for its professionalism in discharging its responsibilities efficiently, effectively and in a very balanced manner adjusting to the political changes and the domestic and international economic dynamics.Instead of respecting and strengthening this mighty organisation, the approach is to dilute and weaken the Institution to satisfy the ego of some politicians and bureaucrats who have an axe to grind. Luckily the Governors were strong with a few exceptions perhaps and they could make the Institution nationally and internationally strong. The bureaucracy is treating this institution as a wing of the Government and interfering even in deciding the salaries and perquisites leave alone as to how to go about its important central banking responsibilities. Even the pensioners have not been left out and their pension updation has been stopped by a speaking order ignoring the agreement entered into between the Bank and the Government to grant /revise  pension for RBI retirees on par with the Central Government employees. way back in 1990. The politicians are unfortunately being hoodwinked by the bureaucrats and neither the Government nor the bureaucrats see any reasoning or rationale in stopping the pension enhancement which is nothing but a subsistence allowance having even the approval of the Supreme court.   
The Government definitely cannot weaken the RBI in its own interest, in the interests of the economy and in the interests of the people. It takes decades and lot of hard work, involvement and commitment to develop an institution strong, worthy of its responsibilities and get national and internation recognition. The backbone of any well established  institution is its Human resources and they cannot be ignored at any cost. Pension payments  for the retirees is only a social security measure and the need to revise the pension at periodical intervals in these days of galloping inflation is just a genuine need and very essential to keep the body and soul together. 

Dr T V Gopalakrishnan

Inflation and cost of Living

The cost of living has been on the increase and there is no way of making it come down but inflation has been on the decline and will continue to fall further over a period of time. The prices of food items like dal, rice, grains,pulses,  vegetables, oils, fruits, and all other items of food without exception have increased over a period and people are suffering is a ground reality. The cost of living has increased by leaps and bounds thanks to increase in travel costs, increase in the prices of food shelter and clothing, medical expenses, educational costs etc etc. The experience of ordinary masses is miserable and by and large they are finding it difficult to make both ends meet. 

Service tax among other things is the culprit  behind the ever rising cost of commodities and services and this Government and its bureaucrats continue to tinkering( like any other Government in the past) with the taxes which are highly inflationary.Instead, if the Government is after speculators, hoarders, black money dealers, corruption in various places, improving the Governance standards in various institutions particularly banks and Public Sector undertakings, the revenues of the Government will automatically get augmented and they cannot be inflationary by any reckoning. Old habits and practices of tinkering the taxes to loot the masses if continued, the so called Ache Din will be a distant dream and it wont take much time for people to realize  that  they have been very nicely fooled with empty promises and false hopes. People really do not understand the difference between inflation and cost of living is a fact which needs to be convincingly explained by the authorities with reference to the  wages and inflation. 

Dr T V Gopalakrishnan

Government bent upon encouraging Stressed assets in banks.

''The appraoch of the government to set up a Fund to tackle Stressed assets of banks  can only help to encourage borrowers to default. This  will act as a moral hazard and water down the discipline envisaged on the borrowers to avoid diversion of banks funds and conduct the loan portfolio constructively.. What the Government should do is to have  a  Fund created by levying a penalty from undisciplined borrowers and unprofessional bankers in managing the credit portfolio. The approach to bring down stressed assets by using tax payers money or other stake holders of the economy other than those who are responsible to generate stressed assets is an injustice meted out to honest borrowers and other stakeholders of both banks and the economy.''

The Government cannot allow this loot by banks and borrowers using depositors hard earned savings and tax payers money mercilessly. Dr T V Gopalakrishnan

RBI and the Governors

The article is very interesting and the author has given a brief assessment of the various Governors contribution to the economy taking into account their linkages with the Governments in power and the undercurrents at various points. Generally RBI is not closely watched by the media and the Governor's performance and RBI's role in safeguarding the macro economic fundamentals particularly inflation and economic growth have not been evaluated independently by any agency or the media. If political interference is too much  in RBI's functioning ,some Governors dare to be very vocal and get noticed and attracted by the media.Their positives contributions in keeping the economy insulated by any external financial turmoil like Asian crisis, global financial crisis etc seldom get noticed or publicly recognised..The history volumes of RBI are basically brought out based on the published materials and the secrets if any why an event has happened, how it happened, or the circumstances under which it happened and how it had been handled to avoid any possible catastrophe etc do not seem to be made transparent and perhaps the author in his proposed Monograph on RBI and with his intimate knowledge of RBI as a Consultant  and senior Journalist specialized in  Finance and Economics can bring out in detail how the RBI keeps itself free from Severe Criticism from public, media and is able to do reasonable justice to the functions entrusted to it  despite lack of autonomy even in taking care of its own staff welfare leave alone in managing the economy and finance. 

(This comment is sent to Business Standard dated 16/11/2015 against TCA's article on RBI )

Banks' IT and Customer service.

IT has not  reduced banks' cost but it  has definitely  removed the Customer Service from banks is an undisputed fact. .Now the Customers are at the mercy of banks and the Technology. The fact remains that human touch and the values of human behaviour, relationships and the understanding of customers are all missing and all are suffering.  Customers who used to have the pleasure of going to banks ,interacting with other customers  and bank officials are avoiding visits to banks if possible and this culture of having some cordial interactions with banks ' officais has been virtually absent. The Staff attached to banks also seldom show any interest to interact with the customers , or give a smile or even to recognise his presence in the bank premises.So goes the Customer Service in Banks. Service depends on the intelligence fed into the machines but as of today one cannot have the feeling that  the intelligence  is available.

Dr T V Gopalakrishnan .  

Employment Survey and Better inclusive Growth.

The employment survey is very essential as many are self employed in lots of ancillary services earning in lakhs in major cities and having apparently no knowledge of the taxation system , or anything about the financial literacy and excluding themselves from the formal banking system. Now in major cities like Bangalore, Mumbai, Chennai, Calcutta , Delhi etc, maid servants are understood to be earning around Rs 15000 to 20000 per month on an average covering about six or seven houses, milk vendors are earning in thousands by way of Commission and service charges, Car washers in major gated Communities are earning in thousands by charging on an average 400 to 500 Rs per month per car washing many cars, and  fruits and vegetable vendors are doing roaring business having their establishments in front of housing complexes with flats and independent houses numbering more than 1000s.. One is very happy to see that people are really industrious and enterprising but they do not seem to be included in Banking and other employment details. They do provide lot of services but seem to be outside the purview of employment details and statistics gathered for the purposes of GDP, employment, provision of subsidies, and augmentation of revenues to the Government..While many get employed and most of them make good money but many suffer for want of proper accommodation, medical facilities, educational support for their children. They are also harassed and exploited  with corrupt practices and extracting money informally with or without the knowledge of authorities. They need better attention, guidance and inclusion in the formal system of banking and financial inclusion. The informal economy needs to be brought under formal economy for the over all development of the economy and better welfare for people at large. Dr T V Gopalakrishnan.

Human Intervention is a must to fix Frauds and NPAs in banks.

The problem in banks lies not in adhering to KYC norms but in Not Understanding the Customer ie UYC. The transactions when done in a concentrated manner confined to some  few accounts which are of recent origin should naturally arise some suspicion in the minds of officials. This does not happen in our scheme of things as mostly these are done using Technology without having any scope for human intervention. Here in lies the problem. There should be some human intervention to track transactions of suspicious nature and this can be done  only through outsourcing some experts having exposure to inspections and scrutiny of accounts in bank branches.. The  problem is that RBI seems to have stopped inspection of major branches particularly branches having huge Forex Business. The scrutiny of accounts on a surprise basis needs to be carried out in major branches by experts in Forex and loan accounts. Both Frauds and NPA problems can be fixed to a great extent by this approach

Dr T V Gopalakrishnan

Make STT an Important administrative tool to Contain Volatility in the market

Develop STT as an important tool to contain volatility in the market, undue speculation, and to augment revenue without any administrative hassles. There can be different rates of STT for purchases and sales and for amounts exceeding certain cut off limits fixed for sales and purchases. Retailers doing transactions for less than a cut off limit can be given even an exemption to encourage retail participation in the market. Over a period, the approach should be to remove the capital gains tax by suitably modifying the STT for revenue loss if any. STT can also be different for Individuals, Institutions, MFs and FIIs. Dr T V Gopalakrishnan (This comment appeared in Business Line dated 23/10/15)

IPOs and Gullible Investors

 Almost all IPOs have trapped fresh investors. Declaration of dividend just before the IPOs is a clear indication that after the IPOs , no dividends would be declared for years to come. If SEBI were to analyse the performance of Companies which have gone for IPOs and raised capital during the last five years or so can easily observe that the Companies have duped the investors and they have not seen the IPO price after listing. IPOs pricing is greedy and aggressive and SEBI does not seem to have any say in the matter.

Dr T V Gopalakrishnan

(This comment is published in BS dated 23/10/15).

Business and Human resources Risks in Banks not easily measurable.

The quantitative measurements some of the risks in banks  is ok to some extent where the Regulation and supervision are meticulously adhered to and banks are allowed to run on professioal lines without any interference from the Government. and the accounts are not allowed to be manipulated in any way. The over all business risks  are not based on any mathematical models and the element of human risk at least in Indian Context has not been brought under any assessment.The business risks thanks to interference of the Government on day to day running of banks, deployment of credit to preferred segments and chosen projects and financial support to the Government  through statutory Liquidity requirements etc gets distorted to a great extent  and are not measurable by best of mathematical formula. Similarly the human risks in running the business are not subjected to any assessment and both the business Risks and human Risks qualitatively affect the business models and are not easily measurable in the absence of any serious thought as in the case of other risks. Since banks deal in money and with human resources and both are very sensitive to handle. the risks measurement approach  presently in vogue cannot be  a foolproof  method to prevent financial weaknesses and failures.  

Dr T V Gopalakrishnan 

Poverty Elimination and Institutions

The article offers lots of food for thought to the poor  and to those who head institutions which are specifically opened with lots of Pomp and Show to eliminate poverty in the Country Some such institutions are Cooperative Banks Regional Rural Banks, NGOs, Local area Banks , with an Apex Institution called National Agriculture and Rural Development Institution set up in 1982 to give a lead. It is high time the Government in power evaluate these Institutions and how far they have done justice to the objectives with which they are all set up.Except perhaps NGOs, other Institutions cannot justify their existence in helping the rural development and elimination of poverty through agricultural advancement.The farmers are committing Suicide and these Institutions merrily survive enjoying the budgetary support and all other Concessions that come to them from different sources in the name of of agriculture and rural development.The role of NABARD definitely calls for a very quick revisit in the matter.The resources wasted on these institutions if given as subsidies and incentives to the rural people and farmers , they would have themselves flourished and the present situation of poverty and poor agricultural production could have been avoided. The role Local Boards of RBI played , also needs to be urgently reviewed as they can definitely contribute to the development of rural and agriculture development with their involvement in guiding, assisting, supporting, and providing the expert advice to the State Governments and the Institutions and coordinating  their activities and bringing to the notice of the Central Government the updates on various issues related to the rural and agricultural development. The Production and supply Constraints faced by the entire Community can be easily addressed if the Local Boards of RBI is activated and given  importance in effectively involving themselves in the development of the all the four regions with a competitive spirit. Any office set up should prove itself worthy of continuing with its performance in terms of qualitative improvement in achieving the objectives with which they are ser up.

Dr T V Gopalakrishnan

(This comment is in response to the write up on Breaking the Bonds of Rural poverty that appeared on the world Food day in the Hindu dated 16/10/2015). 

Frauds in Banks

How bogus firms come into operation? How the banks are able to open several accounts without any suspicion.? Where is the KYC? What is the role of Concurrent auditors? The Bank generally will have an audit committee, Internal Inspection Machinery, statutory Inspection  and the system of submission of various returns to different Controlling offices and the Regulator? How the entire system has failed all these years is a mystery? These are all some questions lingering in the minds of  all stake holders of banks particularly depositors who are very badly hit for want of adequate return on their deposits,  inadequate and unsatisfactory customer service and harassment in the name of KYC to place their deposits in the banks.  The roots of this type of fruad would have gone very deep and  it requires really experts to fix the problem after getting an over all  modus operandi adopted to perpetrate such a major fraud. The indian banking system is becoming fragile of late thanks to laxity in supervision, non professionalism in management, and interference of the Government in its functioning. More skletons may be in the cup board as the branch wise inspection by the Regulator has been drastically cut short for obvious reasons. The Indra Dhanush proposals do not seem to address the internal deficiencies of banks which are killing themselves and all the stake holders of the economy. Banks deal with money and human resources and both are very sensitive to be handled. It requires a unique approach and the authorities have to be equally sensitive to manage both.

Dr T V Gopalakrishnan 

Plug all loopholes and prevent black money Generation.

 The black money bill aimed at bringing back black money slashed abroad has not served the purpose. The declared amunt is a pittance. Still something is better than nothing. 

The generation of black money needs to be totally plugged for which the enforcement authorities have to concentrate on the following areas involving professionals from different fields.One way of obtaining information is to have a channel opened for the people to freely report where they come across black money deals giving some evidences or some trace of it.

The areas where vigilance is required perhaps to prevent black money generation and money laundering are as under.

1) Allowing corporates to float any number of subsidiaries without any valid reason. These subsidiaries enable black money holders to have some avenues of investments and both the holding Companies and subsidiary Companies declare losses routinely without being seriuosly probed by any authorities. SEBI can be really vigilant and alert in preventing such companies.

2) Imports and Exports: Bank of Baroda Ashok nagar branch is a live example as to how Companies are alloweed to open accounts freely without adherence to KYC norms or any other regulatory Prescriptions. This must have been going on in several branches in a camoufalged manner as the branch Inspectins are not carried out by the Regulator these days.Liberalisation of regulation is essential but it should not lead to loot or indiscipline in conducting the affairs. There should be sufficient checks and balances.

3) Real estate : Black money is easy to be stacked in real estate. The unsold flats in various cities is a solid example of the volume of black money held in real estates. RBI policy rate cut cannot have any serious impact on the real estate movements as black money holders and banks which have financed these real estates are not affected by such policy measures.

3) Purchase of farm lands and forming farm clubs in and around major cities have become a fashion these days and both black money and white money flow to these farm clubs without any  regulation as such. Some companires are floated and they purchase parcels of lands from farmers at very cheap rates and sell them as plots at exorbitant rates.  They also form farm clubs  and make the prospective buyers as members of these clubs by default.  They generally do not prepare any accounts or make the transactions transparent and extort money from these members in the name of plots maintenance.  Some banks also help them in different ways. The companies turn dormant after a few years and there does not seem to be any follow up on these companies by any autorities. White money gets converted into black money and banks are also involved. The fact that amounts are paid through banks do not have the meaning that the money is white. Banks deal in black money and no suspicion arises.

4) Purchase of Gold, Jewellery and other highvalue  Commodiies :The dealers invariably insist on black money and they never entertain cheque or card payments. The IT authorities can visit any bullion merchants incognito and experience themselves that without cash no transactions can be carried out.

5) Dealers in furniture, furnishing houses spread over entire country: They always insist on cash and they seldom take cheque or cards. 

The list goes on and if the authorities can really be after them, the finacial system in the country can be very clean and the revenues of the Government can get augmented several times. The informal economy which is large and bigger than the formal economy needs to be fixed and earlier it is done the better.

Dr T V Gopalakrishnan

Depositors lose interest on deposits and to keep deposits in banks.

If some one were to make a study of the Net Interest Margin (NIM) before and after the RBI's policy announcement, it can be conclusively proved that either the NIM would have gone up or would  be maintained at the level obtaining before the policy. All the banks have reduced the deposit rates by 1.25% and 1.5% and the base rate cut has been in the range of 0.5 % and the maximum of 0.75%. As long as the banks are inefficient in dynamically managing their assets and liabilities  in a highly professional manner and their performance is judged by the NIM they manage to exhibit, the transmission of rate cut by the banks will be akin to chasing a mirage. Dr SubbaRao former Governor was harping on this but without any tangible change. The net result would be depositors will lose their interest on deposits and the interest of keeping money with the banks. The borrowers will continue to loot in all forms and the economy and the tax payers will ultimately bear the brunt. Dr T V Gopalakrishnan

Where is the autonomy?

This rfers to the news item Centre’s delay in approving pension updation scheme irks RBI retirees (Business line Oct 8,2015). It is unfortunate that the Periodical updation of pension on par with Central Government employees which was agreed and implemented in terms of an agreement between the Central Government and the RBI in 1990 was arbitrarily withdrawn by means of an oral order without any rhyme or reason and the retirees are made to suffer since 2005 in the fag end of their life. RBI is supposed to be enjoying autonomy but one wonders even for the payment of pension for which it does not depend on the Central government as it has its own funds specifically earmarked, has to get the clearance from the Government. It is not only the question of autonomy but it is  also the question of survival of retirees in these days of high inflation, exorbitant medical expenditures and ever increasing taxes and declining interest rates on deposits that worries and  kills literally the retirees.  The dispute seems to have come out of some ego and definitely not for want of resources or not recognizing the genuine need to update the pension which is universally and generally done to keep up the social security aspects and to maintain the standards of life for the retirees.  Retirees cannot be condemned as they have toiled to keep up and contributed a lot to enhance the image of RBI which enjoys international recognition for its professionalism and competence. This should have been settled amicably between the Central Government and RBI without involving much of publicity.

T R Usha                 

SEBI, Income Tax Dept and the black Money.

Both SEBI and Income TAx Department have to bear the responsibility for allowing generation of black money and they have to jointly initiate  innovative action to fix the problem. The round trip through promisory notes can be easily avoided if SEBI and IT department decide to be vigilant through proper scrutiny of transactions and track them with intelligence inputs using the IT technolgy.

Further, there are mushrooming growth of subsidiary companies under some holding Companies and the intentions behind having huge number of subsidiaries are nothing but to mix up the black money generation with white money and intentionally avoiding  the trace of it through  showing heavy losses. With such subsidiaries , the holding Comany and the subsidiaries fool the investors and the tax department as well and allow the promoters and directors thrive right royally. No one can have a proper track of transactions and the accounting jugglaries these holding and subsidiary Companies resort to are beyond comprehension and  even the best accountancy brains cannot have a track of transactions they mutually undertake. Here again SEBI and Income Tax department can take some joint action to enure that there are genuine needs of such subsidiaries and they are not set up to hoodwink the Investors and Income tax department without any solid contribuition to the economy. The banks financing these companies also need to be involved as the holding companies and the subsidiaries together can play tricks with bank finance and help themselves and the banks to camouflage NPAs. 

With regard to evasion of  Long term capital gains, the only way to fix thiis without hurting any one is to  have a dynamic use of the Share Transactoion Tax  both on the purchase and sale of shares. The levy is made then and there and the Government can do away with the Capital gains tax. STT on purchase and sales can be different and it can also be different based on the period of holding. Administratively it is convenient to augment the revenue and the ethical deficit now felt in avoiding and evading capital gains tax can be avoided comfortably. There are ways to fix all the problems and the authorities have to be prepared from the angle of ease of doing business and augmenting revenues ensuring total compliance to the ethics desired in business. The economy and all the stake holders would be the ultimate beneficairies and the stock market can be healthy in the long run.   

Dr T V Gopalakrishnan

Why not have a ceiling for the number of Subsidiaries a holding company can have?

Black money generation takes place in India in several ways. Some of the black money gets into stock market and some large corporates seem to be facilitating this with or without the knowledgeof SEBI. Many Corporates have huge number of subsidiaries set up and the way they prepare the accounts for themselves and subsidiaries can easily camouflage the mix of white and black money in all these companies dealings. Such large Corporates seldom declare any dividend and only prepare accounts in such a way that optimism is built up and maintained. One will be surprised to observe that one such large Corporate GMR Infrastructure has more than 100 subsidiaries and many of them are running on heavy losses and including the GMR. The investors are in fact taken for a ride by such corporates and what SEBI is doing in respect of such Corporates having unlimited number of subsidiaries is lingering in the minds of investors?  One gets a strong feeling that black money gets into the system through such subsidiaries and the whole balance sheets of the Holding Company and subsidiary Companies get  liberally fudged in such a way that the best brains in accountancy cannot fix any problem what so ever. Satyam computers had also several subsidiaries and Global Trust bank had lot of vested interest in various small companies. Both got bust over a period and investors lost heavily. Incidentally the promoters of these Comapnies are from Hyderabad. It is time SEBI takes a view on the number of subsidiaries a holding company can have and the method of accounting of mutual interests among the companies with an eye on the black money component entering in a camouflaged manner. It would be also worthwhile to consider a ceiling for the number of subsidiaries a holding company can have. Ideally, it should not exceed two or three to maintain the credibility and  to have some checks and balances on the inter Company transactions in the interests of the investors and other stake holders.

Dr T V Gopalakrishnan 

5:25 scheme and increasing trend in bad debts.

5:25 Scheme scheme is an officially permissible evergreening of long term advances which helps banks to sanction fresh loans and camouflage bad loans. In good old days, there was a system of scruitiny of large accounts by the RBI and banks were taken to task when the accounts were found sticky and non recoverable. With liberalisation of regulation and relaxation of supervion, the accountability for wrong doings has been given a go bye and entertainment of bad loans has been an accepted practice as they can be easily covered up. Sanctioning of abinitio bad loans is a known truth and they will eventually appear as NPAs after a few years and got written of. The Costs incurred by banks to maintain bad loabns in their books of accounts by way of supervsion of bad loans, legal expenses, insurance and maintenance of the assets of large borrwoers and final write off of loans if systematically calculated , would be mind boggling figure and unfortunately the tax payers and the depositors are made to bear the brunt. The issue of bad loans, the reasons behind their generation, how they distort banks balance sheets, how they affect the transmission of RBI's monetary policy , how they affect the cost of funds, the profitability, the morale of honest staff, etc if studied would give a great shock and there cant be any justification to keep the bad debts growing year after year under some pretext or other. Time has come to have a practical solution to prevent the formation of bad debts and nip in the bud itself the reasons behind the bad debts formation by bringing in strict discipline both on the bankers and the borrowers. The loot of money through bad debts needs to be arrested completely with immediate effect and this is possible only by being strict right from the appraisal onwards till the recovery of loans on an ongoing basis and by building up sufficient reserves to liquidate bad debts in case of any by levying a fees for wrong doings both on the part of borrowers and lenders. Ethical deficit crept into the system can be eradicated only with strict punishment and penalty and this needs to be attempted without  any fear or favour. Perhaps, the stake holders of banks Viz the depositors, shareholders, good borrowers, general customers, tax payers have to organise and fight the issue of generation of bad debts. Will it happen in our scheme of things?


Dr T V Gopalakrishnan 

(This comment appeared in Money Life )

IDFC thinks big but shareholders can only think small

IDFC thinks big but the shareholders think small as its bad debts and restructured assets put togother work out to 15% which is significantly very high at the start and with the high trend of ever increasing bad debts and the tendency of borrowers not to repay the debts under some pretext or other in the entire banking system, the IDFC bank will have a tough time to contain bad debts formation and reccovery of accummulated debts. However, the IDFC has scope but cannot hope too high as the environment to work as a bank is not that conducive going  by the experience of many a banks in the system. Besides, the competition let loose with the opening up of banks for payment and settlements and small banks, the challenges are really very high and is definitely not going to be cake walk for IDFC. It has to have an entirely different business model with high technolgy combined with highly skilled human resources who can handle and bring in excellent Customer service in all areas of banking  with involvement, commitment, expertise and knowledge of what they do .    

Dr T V Gopalakrishnan   

Bad debts are nothing but an open loot

5:25 Scheme scheme is an officially permissible evergreening of long term advances which helps banks to sanction fresh loans and camouflage bad loans. In good old days, there was a system of scruitiny of large accounts by the RBI and banks were taken to task when the accounts were found sticky and non recoverable. With liberalisation of regulation and relaxation of supervion, the accountability for wrong doings has been given a go bye and entertainment of bad loans has been an accepted practice as they can be easily covered up. Sanctioning of abinitio bad loans is a known truth and they will eventually appear as NonPerforming and  after a few years they  got written of. The Costs incurred by banks to maintain bad loabns in their books of accounts by way of supervsion of bad loans, legal expenses, insurance and maintenance of the assets of large borrwoers and final write off of loans if systematically calculated , would be a mind boggling figure and unfortunately the tax payers and the depositors are made to bear the brunt. The issue of bad loans, the reasons behind their generation, how they distort banks balance sheets, how they affect the transmission of RBI's monetary policy , how they affect the cost of funds, the profitability, the morale of honest staff, etc if studied would give a great shock and there cant be any justification to keep the bad debts growing year after year under some pretext or other. Time has come to have a practical solution to prevent the formation of bad debts and nip in the bud itself the reasons behind the bad debts formation by bringing in strict discipline both on the bankers and the borropwers. The loot of money through bad debts needs to be arrested completely with immediate effect and this is possible only by being strict right from the appraisal onwards till the recovery of loans on an ongoing basis and by building up sufficient reserves to liquidate bad debts in case of any by levying a fees for wrong doings both on the part of borrowers and lenders. Ethical deficit crept into the system can be eradicated only with strict punishment and penalty and this needs to be attempted without fear or favour. Will it happen in our scheme of things? It is high time the tax payers and depositors raise their voice against formation of bad debts in banks and seek justice as they are the ultimate losers because of bad debts in the banks.

Dr T V Gopalakrishnan

(This comment appeared in Money lIfe dated 29/9/15).

Policy rate cut and the Common Man

Dr Rajan has done the right thing perhaps to give a boost to the economic growth which is unfortunately remaining stagnat for more reasons other than the interest rate. But this lobby of industrialists, market operators and the politicians misses the long term sustainability of the economic growth and inflation which was being nurtured by Dr Rajan all along with his brilliance,professionalism and concern for the economy and the masses. With this recent measure of cutting the policy rates beyond the demand and market expectations, he has virtually killed the depositors with whose money and support the banking system and the economy survives. The argument that the real rate of return has improved because of fall in inflation is only on paper and the common man finds it difficult to make both ends meet because of varities of taxes starting from service tax practically on all items, sales tax, income tax etc and above all corruption and other living expenses like ever increasing retail prices of essential items like rice dal oil vegetables.Fruits the common man is only able to see and come without having it is the reality. Medical expenses are beyond his even  survival thoughts. Every policy ignores the reality of its real impact on the common man and the present rate cut can at best reduce the housing loan by a few basis points. What he wants is an affordable house which unfortunately is not there as the real esate Mafia and builders mafia  are very strong and they keep the prices very high, unaffordable and beyond the reach of an average common man by any stretch of imagination  with or without the support of banks and black money. This policy favours the rich a lot whether the economy grows or not.  The transmission of this rate cut may not materialise as the banking system has never done that anytime in the past. 

Dr T V Gopalakrishnan 

Interest rate and common sense

Common Sense says and demands that Common Man has a right to have a peaceful, safe and comfortable life which the Govrnment is expected to provide. Common Sense also says that there should be equality of opportuninies for every one to survive with the aid of Public Sector Undertakings' efficient and unbiased approach to provide the service at a reasonable cost. Public sector banks have miserably failed to provide an efficient and excellent service is a  well acknowledged fact and they have frittered away the savings mobilised from the masses on the corporate borrowers who have taken an easy route through banks  to loot the public. The public have common sense to understand the atrocities committed by PSBs and the Government in exploiting the hapless depositors and tax payers to cover up the NPAs accummulated in banks. The deposits' rates are coming down whereas the banks Net interest Margin are remaining high and the advances rates seldom get adjusted to the policy rates announced by the RBI .Retail Inflation has come down in terms of index but the actual prices paid by the retailers have no relationship with the index is the ground reality. Ask a common  man as to how much he pays for his dal, rice, onion, fruits, oil, and other food items apart from other maintenace expenses on a day to day basis. He is finding it extremely difficult to make both ends meet is the reality and to understand this, no common sense is required at all. Dr Rajan knows better the sufferings of common masses as the inflation supposed to have touched below 4% is not sustainable and he has  abundant common sense to understand the market  demands and other extraneous pressures to bring down the policy rates. More than anyone, Dr Rajan takes care of the interests of the economy is a fact and given the freedom he will ensure that the economy moves forward with an excellent trajectory of growth and keeping down the inflation. If the inflation is down the cost of funds in the economy which include the interest rate component also will drastically come down. The real strength of the economy is to keep down the costs and make all essential commodities and services  affordable to the vast majority of the people.

Dr T V Gopalakrishnan 

Why not regulate the farm lands and find lands for eco social development?

The land mafia is very active in many places and are able to acquire land from farmers and develop  these  as Farm land clubs  perhaps with  the active involvement of politicians, business men , thugs , goondas and black money holders. They acquire farm lands in bulk from farmers and develop them into clubs, convention centres and what not? They have enough of land and if the government is seriuosly after them, the required land for economic development would be available in plenty. The loss of agricultural production due to such acquisitions  to the economy and the farmers is substantial and the conversion of such lands into  residential plots to amass wealth has been a business in and around major cities.The so called farm land club owners  dictate terms to the plot owners as if there are no laws in the country to be complied with. The urban middle class and those who are neo rich get tempted and purchase such plots and the financial savings which otherwise would have gone  formally to  the Financial system get vastly diverted. The loss to the economy is considerable  in terms of loss of financial savings, loss of agricultural production , generation of black money and degeneration of ethics and values in the society in different ways. It is time seriuos attention is paid in the area of acquistion of huge parcels of farm lands by land Mafias operating in and around major metropolitan centres. It has become a major buisness to amass wealth through extraction  and extorttion of money from  people in the name of social development with social clubs, restuarants , convention centres, marriage halls etc and multiplication of investments.There seems to be no law operating to regulate the land mafiaa and farm land clubs. 

Dr T V Gopalakrishnan

Dr Rajan at the Right place at the Right time

The author has some axe to grind and he thinks that by just cutting the RBI policy rates,the economy will revive. It is nothing but absurd and reflects only on intellectual deficit to assess the over all position of the economy. The infrastructural bottlenecks, like power, land labour and capital which attract investments has been lagging behind in the economy and dirty politics pursued by the opposition without seeing the rhyme and reason to pass certian essentail bills like Land and GST has  an adverse effect to push the economy.The interest rate cut is insignificant in the over all costs and other supporting systems required to revive the economy. Why not the author do something to get rid of the inherent weaknesses seen in the bankning system which is driven by political aspirations, financial loot through Non performing loans, etc. It is easy to blame Dr Rajan who has been doing an excellent job in the interests of the economy and its people. For Dr Rajan this job is a challenge and not a necessity. He has a vision and a misson to achive for this great nation and Central Bank is the most appropraite place for him. Mr Modi will be the most happiest person on Rajan's achievements and performance as his dream of having ache din for all can be realised only through people like Dr Rajan. 

Dr. T.V.Gopalakrishnan

(This comment is given in eET dated 12/09/15 against the article  biggest threat to Modi's threat to ache din is Dr Rajan)  

Pension Updation How long to wait?

RBI maintains its professional standards in what ever it does and it is well acknowledged world over. Though it enjoys autonomy or not it carries out its functions professionally and not getting influenced by external pressures particularly from the Government. However, the bureaucracy which is unable to digest the RBI's professionalism and the Recognition it gets both from the Country and abroad, is creating uncalled for and unjustifiable problems by exercising some powers over the internal matters of RBI particularly in the management of human resources. The RBI employees emoluments and perks need a clearance from the bureaucracy which has no rationale what so ever. Its retirees pension updation has been withheld by a speaking order or so although there is a clear understanding and written agreement to the effect that pension can be updated on par with Central Government employees pension and as and when RBI serving employees salary gets revised. This has not been implemented since 1997 as some bureaucrat has stopped it although RBI does not need any assistance from the Government for paying its retirees their dues.Unfortunately, retirees lead a pathetic life as their pensions have not been updated for almost two decades on flimsy grounds...

Dr T V Gopalakrishnan

(This comment is in response to an Article by Dr Tarapore that appeared on the Free Press journal)