Poor Depositors taken for a ride

Very well said. Indian Financial System particularly the banking system is strong and stable because of the savings habit of the people and unfortunately the same people are being taken for a ride every now and then by fraudsters, bad borrowers, politicians, bureaucrats, lawyers , Chartered accountants, Management experts, regulators and supervisors and bankers. They do not get any sort of protection and on the contrary they are encouraged  rather forced directly or indirectly to keep their savings in banks, Chit fund Companies ,  Non Banking Financial Companies, Capital market etc through small   tax incentives, interest etc  and finally their savings are being misused and liberally abused by the authorities.without giving them any protection to pass on their savings . The trust and confidence the people have in banks get eroded very fast the way the banks fritter away their hard earned savings by allowing borrowers to misuse /divert and writing off of the loans without even the knowledge of the depositors. leave alone with their consent. The banks take the depositors for a ride and when they get liquidated or closed down because of erosion of deposits with bad debts,tax payers have to come their rescue again without their knowledge and save the banks.  The legal system helps the looters instead of the depositors and the DICGC provides an Insurance cover of Rs one lakh for the depositors and how and on what basis this pittance compensation has been fixed,is never questioned or analysed by any authority. The Premiums collected by the DICGC from banks and how they get accounted and what happens to the premium collections etc are never questioned or made transparent. The accountability and Governance standards are the worst one can think of in the economy and unless and until this is fixed,the 5 trillion economic growth will only remain in dream. The depositors and capital formation depend on the trust and Confidence of various institutions and the way the credibility of the Institutions efficacy and delivery of functions gets deteriorated every passing day,, this gets completely eroded and one can expect only  dooms day affecting all. 

(Comment in response to Mr Parikh's observation on the Depositors fate appeared in BS dated 10/10/2019). 

Econo-Reflexions: Dr Jalan Panel and Transfer of Reserves of RBI to ...

Econo-Reflexions: Dr Jalan Panel and Transfer of Reserves of RBI to ...: It appears from the press reports that prima facie  the recommendation of the Dr Jalan Committee on the transfer of RBI reserves to the Go...

Dr Jalan Panel and Transfer of Reserves of RBI to Government .

It appears from the press reports that prima facie  the recommendation of the Dr Jalan Committee on the transfer of RBI reserves to the Government is on expected lines in the sense that while the Government  is entitled to have its share of RBI surplus but the committee does not appear well convinced  of the way the Government intended and  demanded to get the entire Reserves transferred in one lot perhaps to cover up its failures on the economic front .No doubt the Government  as Owner of RBI and having its dominance on RBI by virtue of having all members of RBI Board appointed by the Government,  is entitled to have the surplus technically and politically, but  RBI being set up as an independent Organisation under a special statute, has certain unique role and responsibilities to deliver taking care of  predominantly the Government's interest, the economy and protect the nation from the national and international calamities arising out of political economic social and technological changes and dynamics. The Committees' recommendation though not fully disclosed with regard to the quantum of reserves to be transferred (as per the press reports version) is something very vital and its approach to transfer the reserves over a period of time needs to be underlined for its Reservations and perhaps Hesitations to transfer entire reserves in one lot. No Central bank worth its name and reputation can do this in the Sovereign Interest and in the interest of having a strong Financial system to support the growth of the economy based on the sound  economic policies  expected from a popular Government without much of damage to the entire fiscal position. The Committees' Recommendations should work as a major signal to the Government to leave alone RBI as an independent Organisation and to enjoy the surplus of income it makes prudentially in a manner without detrimental to the Financial  System Stability of the nation and without ignoring the need to have a  financially sound Central Bank to take the economy forward and strong and project inter alia  an image of the nation among other powerful nations and Independent Central Banks. 

Dr T V Gopalakrishnan

( Personal views and Comments given to Business Standard dated 18th July 2019) 

ESTABLISH A GOLD BANK AND OPEN UP THE ECONOMY IN A BIG WAY.

The Modi  Government in its second term  has a lot to do to live up to the expectations of the whole world and Indian masses . The economic Development is the only way to live up to the challenges and the resources have to come from with in and India is fortunate to have all the resources that are required to take the economy forward on the fast track. Human resources and talent are abundantly available . Technology is at its command. Money is perhaps the only resource in short supply but if one were to tap the idle  Gold Reserves estimated at around more than 20000 tonnes and convert them into cash, the country has all the resources needed to develop the economy the way it wants and the world expects. The Reserve bank can establish a GOLD Bank under its control and mobilise the Gold reserves lying scattered through out the country with people all over , temples, churches, mosques, charitable institutions, and other places where even mining can be explored. 

It is time for the new Government to have innovative ways to find resources for all its developmental and welfare activities along with its reforms in taxation and governance. The Gold Bank can be set up in Mumbai where the Reserve Bank has its Central Office and the Government has plans to develop   an international Financial  web.  THE GOLD BANK IS THE KEY TO OPEN UP THE ECONOMY AND MAKE IT A WORLD LEADER. 

Dr T V Gopalakrishnan 

The article reads well and well argued against RBI  but it is totally one sided is what I feel. The need to make RBI accountable is well taken but how to make it accountable when its so called autonomy is only on paper and it is made to dance to the tunes of politicians, bureaucrats and  it gets questioned  every now and then by all when something against the bureaucracy or media or political philosophy is expressed directly or indirectly by the top management through their speeches and otherwise. The author should have  and could have done full justice to her write up by probing into the working of RBI and understanding well  as to what extent it is allowed to have operational autonomy in its day to day functioning.  No doubt some Governors with their diplomatic skills and taking advantage of political connections, and command over the bureaucracy could appear to be functioning as if the Institution has full autonomy, but some had miserably failed and had to leave despite their intellectual supermacy , mastery over the subject of Economy, Finance and Management. RBI despite all short comings has earned a reputation for its professionalism in keeping the Financial System free from turbulence and  unsoundness. The problem seen in NBFCs is not RBIs' making is a well established truth and as long as political  and bureaucratic interfrence is there in the functioning of any well meaning Institution , I feel your well intended objectives cannot be achieved. The fact that  RBI has  punished  the erring banks and saved  the depositors  from catastrophe is   well known to the learned public and how RBI fails at times is also well known to all Intellectuals of this nation. The need to make RBI totally independent and making it  accountable to the parliament and public is  paramount and definitely the need of the hour.Hope this article will  help to generate an intellectual debate and help RBI to have its autonomy in true sense of the term. 

Dr T V Gopalakrishnan

This comment is given in response to an article on "RBIs' Accountability questionned" that appeared in Money Life.

Time to review The System and Procedure pursued in PSBs

Dear Sir,

                    Sub Time to review the System and Procedure pursued in PSBs.

The PSBs need to change their approach, attitude and above all appearances to remain in banking business which is essentially to deal with the most sensitive Commodities Ie Money and human resources. Banking is a service oriented commercial activity with lots of social objectives to serve the ordinary masses and the economy to achieve the twin objectives of  economic Growth keeping the inflation under the affordability of the large segment of the population and fair distribution of the resources ensuring inclusive growth of all the segments of the economy. Public Sector Banks having SBI as the largest bank have to be necessarily role models to all those in the Financial services sector in the discharge of their major banking functions ie mobilisation of deposits and deployment of the  funds  equitably , profitably and socially to achieve the economic growth well intended and vigorously pursued by the Government . In this context, I have a few and very simple suggestions for your possible consideration and implementation.

Very recently, myself and my wife both senior citizens  happened to visit a branch of the State Bank of India to deposit some money under the tax savings  scheme to claim the rebate under 80c. My wife had a deposit under the scheme which got matured in February but unfortunately, the bank had no system of sending an alert through SMS or email to the depositors particularly when the depositors are senior Citizens and chances of their keeping track of transactions are very remote.  The Deposit got matured on 2^nd February 2019 and being away on a pilgrimage, we missed the date and happened to see the Deposit receipt only on our return. Immediately we rushed to the branch and requested to renew the Deposit under the tax savings Scheme to claim the rebate under 80C for this Financial year ie 2018-19. The System and procedure of the Bank is such that it took almost one and half hours to complete the process involving transfer of the matured deposit proceeds to an SB account and then opening a fresh Deposit account with a request application along with a cheque to transfer the money from SB account to the new FD. The Staff was very courteous, helpful and Customer friendly but the Systems and procedure followed involves time, paper work despite having a computerised system and core banking solution to take care of all possible demands of bank and Customer needs. It is really a pain to be in the bank premises for an unduly long time to do a small transaction incidentally favouring more the Government than the bank. I strongly feel the whole transaction can be finished in five minutes with a simple request from the Customer in writing and submitting the matured deposit receipt. The very joy of visiting the bank vanishes the moment the procedures are advised and made to wait indefinitely to completely the process. This can be and needs to be avoided at any cost if the Image of PSBs matter among the depositors who are the real back bone of the Financial system.

Then the banks’ image along with the  Government’s   prestige get projected on the Receipt issued by the bank for the Deposit made under the Tax savings Scheme. While simplicity and Cost saving are essential features to be followed and admired by all, they should not be at the Cost of bank’s on stature and image among the banks and the public. I am sorry to observe that the receipt for the deposit was in A4 sheet the preservation of which with distinction as it carries value for the holder is at great risk. I am shocked to get a receipt in A4 sheet which shows the pathetic condition of the bank and the attitude it has for its Deposit Customers as they have no other choice other than come to banks to keep the money. This is going to ruin our PSBs’ prestige and image and definitely SBI’s being the largest public Sector Banks with maximum international presence as they  cannot and should not stoop to such levels. As seeing is believing, I enclose the receipt issued for our deposit for your perusal, and own judgement.

PSBS have a greater role and responsibility in the nation building and making the financial system strong, visible to the whole world to emulate them for their involvement, commitment and supporting the economy through mobilisation of resources from within and outside country and deploying the funds effectively, efficiently and economically to achieve the political, economic and social objectives set by the Government and very rigorously pursued. The steps initiated by the government to make the PSBs strong by injecting additional funds along with helping them to wriggle out of the bad debts conundrum are really admirable but they need to be adequately supplemented by improving the Systems and Procedures in carrying out the basic functions of banks, with efficient and flawless customer service and image building exercises without adding to the costs in any manner.  Time is equally precious to all ie all Service Oriented Institutions and Customers as well. Nothing is impossible in this great Country is what is being established in the recent past.  Attention is all that matters.

With best wishes and highest regards,

Yours faithfully,

Dr T V Gopalakrishnan

A Senior Citizen and Well wisher of The Government.   
 (Copy of  the Letter addressed to the FM)  

Letter to the Honourable Prime Minister

To,

The Honourable Prime Minister of India,

New Delhi.                                                                                                                                                                                                                                                                                                                  

Respected  Honourable Prime Minister,

                                                     Sub: A highly fruitful and satisfying Second term

This is perhaps my third and last letter to you before you complete your first term as PM which is a success by any reckoning despite shortfalls in meeting all the aspirations of all 130 crores of people.   The policies and reforms introduced are no doubt very bold, imaginative and unparalleled and the fact that they are whole heartedly welcomed and supported by the people is by itself is not a mean task but a very great achievement. The shortcomings if any, however, lie not in your policies but in their implementation due to certain vital and very fundamental information missing in the scheme of things. The major flaw is lack of data on employment, income, generation and distribution of wealth. The depth of the informal economy is so deep and unfortunately it has not been fully fathomed out by any Government so far is a wonder and is the root cause for all the ills in the economy. Whether it is agricultural growth, industrial output, inflation, employment, black money generation, corruption, capital formation, generation of non- performing assets not only in banks but in the whole economy, evasion of taxes and laws of the country, the information does not get captured fully to frame policies and their effective implementation. The Country has produced worldly recognised great Statisticians and Information Technology Experts, but still it  has not been able to generate data on certain vital basic aspects of the economy is an unacceptable state of affairs leading to failure of very grandiose schemes.  In this background, the introduction of Aadhar is a landmark but a lot remains to be done to make the Aadhar a fool proof mechanism to capture some of the essential and vital statistics to support the economy and Governance. The other issue one can think of is general deterioration in Ethics and values seen in the society due to the faulty education system practised over several decades.

To give an example as to how the information does not seem to get reflected in national statistics, I would like to briefly cite the following from my own experiences and perceptions. I live in a fairly large Complex in Bangalore where there are 2000 flats. The area is surrounded by a few lay outs consisting of lots of independent houses, flats, schools, offices of all kinds, hospitals, malls and all kinds of shops and establishments one can imagine. I do a mental survey during my walks and otherwise by my casual observations day in and day out and I find that there is no shortage of employment, income, tax, economic activities to generate wealth and its distribution. To what extent, the data gets captured is a million dollar question. I casually observe that there are hundreds of security guards, maid servants, car drivers, car cleaners, iron wallahs, milk and flower vendors, carpenters, plumbers, electricians, hawkers of all kinds spread in and around our complex earning definitely not less than ten thousand rupees a month. Many may have migrated from rural areas and the fact remains that there are no agricultural labourers to work in the fields and many lands are allowed to remain barren. My own gut feeling is that many earn more than the cut off limit prescribed for Income Tax and they do not seem to get reflected in the employment data of any kind or for that matter in the GDP itself. Likewise one gets a doubt as to whether all the shops and establishments which include dispensaries, hotels and restaurants earning in thousands and lakhs of rupees and that too in cash, generate genuine bills and report the correct earnings and tax collected. This may be true of thousands of complexes, townships sprung over the entire country . The idea is not to suspect their dealings but to what extent their economic activities get reflected in the National Statistics and help policy formulation is a matter of great concern.

The erosion in values seen in every walk of life in the society poorly reflects on our ancient culture, wisdom, civilisation and way of life. This needs to be tackled on an urgent basis though there is no quick fix solution. Perhaps, through quality education, enhanced value systems in our judiciary and administrative set ups, a beginning can be made to bring back fast the lost values and build a strong foundation for future generations to come.  For that to happen, you have to be back in power and I wish and pray for your grand success in the coming election.  The Country is rich and great in all   respects in terms of human, natural and other physical and financial resources and with a very dynamic and resulted oriented leadership the so called Ache DIN promised cannot be very far off.  God is Great.  

Wishing you the very best and all successes for your good thoughts and sincere actions

Yours faithfully,