Understand the importance of RBI and allow it to function in the interests of the economy.

RBI balance sheet cannot be equated with the PSU's balance sheet and the Government cannot expect RBI to go on declaring dividends ignoring the responsibilities of RBI to manage the risks the Country can face both domestically and internationally. RBI's capital has remained unchanged at Rs 5 crores since its inception in 1935 and based on this capital the dividend paid to the government is of very high order.RBI being a very prudent conservative and responsible organisation has managed its affairs extremely well and has been transfering maximum surpluses to the Government and at the same time building up reserves to meet all contingencies. The approach of the Government to snatch away the resrves is akin to selling off family silver either out of greed or because of its arrogance to dictate to a well run institution  and weaken it or beause of its inefficiencies to manage its own fiscal. In any case, this requires a public debate factoring into the practices followed by the well run central banks of different countries. RBI unlike other corporates is definitely not run on commercial considerations is what the Government should realise and RBI is always backing the Government for all its socio economic policies with its highly professionlistic approach keeping utmost honesty , integrity and comepetence in delivering its assigned functions with or without autonomy. RBI has earned its International status and recognition inspite of the intervention from the Government on its day to day functions speaks volumes about its professionalism in pursuing very sound monetary policies and keeping the financial system of the country so far healthy and risks free. It has also ensured to keep its own finances strong is a master stroke and the Government should feel comfortable that its central bank is economically sound and keeps the country's economy stable and steady with all  its limitations on the role of the Government. The Government cannot ignore the fact that unlike other central banks of different countries RBI plays a unique role in supporting the developmental functions of the Government and tolerates all the political gimmicks played  using the banking system  ignoring the basic functions of banks ie acceptance of deposits and lending for the expansion of the economy and its all round growth. Dr T V Gopalakrishnan (This comment is in response to the Editorial Divided on Dividends that apperaed on the Hindu Business Line dated 8/917).

Banks turn out to be the weakest Institutions and RBI loses its glamour beyond recognition.

Liberalisation took away the discipline meticulously built upon banks boards and RBI in the grant of loans using banks scarce resources raised by way of deposits. Banks are not like any other manufacturing units as they basically deal with money and human resources as their raw materials. These are very sensitive areas and need to be dealt with uniquely to protect public trust in banks for their long tern sustainability , health and soundness. They are not expected to throw away the depositors money as advances to be eventually written off to suit the political convenience, bureaucrats' whims and fancies. Banks need a separate approach as long as they accept deposits and lend them to help the economy to prosper. Banks cannot be expected to throw away the public money  and remain silent when the funds are misused by the borrowers and the borrowers fail to contribute to the economy in terms of GDP growth. The loot was the direct result of liberalisation and RBI was also dictated to loosen its regulation and supervision. The result is the economy suffered perennially, banks became weak, depositors suffered, and shareholders lost their wealth. The monumental failure on the part of RBI is caused by the monumental failure of the authorities in recognising and understanding the banking system and the role assigned to RBI to develop a strong financial system. The loss is substantial now and it is becoming beyond remedy . Banks have become a source of recurring liability and they turn out to be the weakest institutions to support the growth of the economy envisaged .It is a pity that RBI is reduced to nothing and is also losing its glamour as one of the best Central Banks of the world for its professionalism, independence, integrity and role model status to be emulated by many a central banks including those in advanced countries.Man's ingenuity in killing strong institutions is something unbelievable .It reminds the saying that it takes twenty years for a woman to make a man of her boy , but it takes only a few  minutes to make a fool of himself by another woman.

Dr T V Gopalakrishnan

( This comment was given to Business Standard in response to the letter by R C Modi on the 27th of August.) 

RBI failed to do what it could do to protect its image as an Independent Central Bank.

All said, Dr Rajan also could not save RBI from its failure in various responsibilities particularly Regulation and Supervision of the Finacial system and the banking system in particular. The Instiution lost its glory and image and it has been reduced to a division of the Ministry of Finance and is being dictated as to what to do with its functions. The Instiution has lost its independent thinking and operational freedom and some speeches here and there by the Governors have not helped to protect its reputation. No doubt individually almost all Governors have done well with their outspokenness, academic brialliance , but only a very few can claim that they have kept the image of RBI in tact under all political massacres the Institution had been subjected to. Dr Rajan is also not an exception. He came and conquered and kept his credentials in tact but allowed the instituion to weaken as all his predecessors except one or two perhaps. History of the Reserve Bank  if written unbiasedly will vouch for that. RBI has failed to do what it should do is the ground reality and this is because even veteran Governors failed to do what they could do.

Dr T V Gopalakrishnan

( This comment appeared in Financial Express dated 24/8/17 against the article Raghuram Rajan pens book RBI stint in turbulent times)

Old age and welfare

This refers to your editorials Rethinking Old age to the benefit of all and Innovative Saving Products for seniors that appeared in ET dated 13th and 14th July 2017 respectively. In this regard to quote  the adage that old age is a curse is very appropriate. Seniors are not wanted by the family, the society and the least by the Government is becoming true these days and unfortunately their percentage of presence is on the increase and it is around 6% of the population thanks to the increase seen in the lifespan. The cost of living particularly the health expenditures has gone up beyond the imagination of the old people and their earnings potentials. The approach of the government to seniors has also been adding miseries as the concessions enjoyed by the seniors in the form of additional interest, tax incentives,and other concessions are gradually vanishing or being curtailed drastically.Technology plays its own  adverse role in taking  away their charm of living. Th fast erosion of values and ethics  seen in the society also affects them emotionally in addition to poor health and financial conditions.  It is high time the Government introspects seriously  and do something concrete to mitigate senior Citizens' suffering and enable them to lead a dignified life in their advanced age. Lip sympathy is of no use.

Dr T V Gopalakrishnan

(Edited version of this appeared in ET dated 15/7/2017).

      

  

RBI's recent statement  on customer service in banks  and fleecing them is an eye wash. To day some papers have reported SBI's move to levy Rs 25 for every withdrawal from ATM. Banks ' financial position is very bad and no one knows their true worth. RBI has stopped detailed inspection of banks years back and the Government's interference in banks working has increased without any control. Some Committees appointed to look into  banks working  and suggest improvements  were only to fool the public as no concrete steps seem to have been taken to implement their recommendations.. The losses on account of NPAs cannot be easily recovered unless the banks widen their net to collect levies from all customers particularly deposit customers and small borrowers is the ground reality. This is the easiest way to cover up the losses. Unfortunately the Banks' Boards Bureau is also proving to be another NPA to suit the corporate borrowers who dictate terms to politicians, bureaucrats  and all Institutions which include RBI, Chartered Accountants Association of India and major  PSBs. The Banks' balance sheets and Corporates' balance sheets need to be thoroughly audited by  Specialist Investigating agencies to bring out the truth about their Financial position. More sensitive information is hidden than revealed and the only way is to enhance their bottom lines with easy and unquestionable levies from hapless depositors .   Good to see that Money Life has taken up the issue with all seriousness and is trying to get some justice for innocent depositors with whose money banks do business and enrich the undesirable  and the most undeserving elements in the society.  

Dr T V Gopalakrishnan

(This comment was sent to Money Life in response to an Article that appeared in Money Life dated 5/6/2017).

Make GST the game Changer

Apropos your editorial GST If it were done when it is done (ET dated 22/5/17), the ultimate objective of the GST is  to rationalise the taxes in such a way that the nation as a  whole will have only  one tax which will help to augment the revenues and distribution of wealth in an equitable manner and bring down the inequality of wealth and incomes among all states and the people The success of the GST no doubt depends on its effective implementation with adequate checks and balances to minimise corruption, leakage of collection and efficient and timely distribution of goods and services and the revenues through out the country.The administrative system needs to be made strong and accountable which is possible only if the Government moves ahead with the implementation of the GST with speed with adequate provision for  periodical review of  progress and revision of the rules of the game  in a befitting manner without loss of time and intended objectives.

Dr T V Gopalakrishnan

(this letter appeared in ET dated 23/5/17 with some modification.)

NPA Resolution - the New Ordinance

The present approach announced by the Government empowering more powers to RBI can at best find some solution with all problems to encash the accumulated NPAs. Its success is not guaranteed as the vested interests who have looted the banks systematically will not so easily yield to such pressures and tactics. What the banking system needs is to stop fresh flows of NPAs for which an unbiased approach to discipline the banks and borrowers is a must. No such attempts or intentions are visible in the new ordinance just released. Both stock and flow approach need to be rigorously implemented without any scope for interference from the Government , bureaucrats and politicians.

Dr T V Gopalakrishnan

5/5/17.