Dhanalaxmi Bank to remain Strong

Dhanalaxmi Bank,one of the oldest private sector Banks from Kerala has been in the news for quite some time unfortunetely not for good reasons. The bank underwent some drastic changes under the earlier CMD Mr Chaturvedi and it lost its grip on its traditional and conservative banking. Historically, the bank has some Union Issues which got aggravated with the massive induction of outsiders at a exorbitanly high salaries under Mr Chaturvedi's regime. Besides, the composition of assets and liabilities which had some semblance pf order and were manageagle had undergone sea changes with Whole sale deposits and whole sale lending replacing the retail deposits and retail borrowers causing hardships in terms of high costs and poor recoveries. With the exit of Mr Chaturvedi, some of the top Executives have left the organisation and with them the advances have become NPAs and the deposits have also disappeared. It will definitely take some time for the new Management to adjust the business composition both with HumanResources and Assets and liabilities.
The bank is traditionally strong with a large clientele and It has all the strengths to run on viable lines.It only requires good guidance from the RBI and support for some time to stabilise its recently changed management set up and bring back its own way of functioning with its traditional approach combined with the modern way of banking. The bank is strong and it has all ingredients to remain strong and grow strong.

Dr.T.V.Gopalakrishnan

( This comment appeared in The MInt dated 23/11/12)

The Cost of NPAs are borne by innocent stakeholders

The staggering NPAs of banks are nothing but a different kind of loot of public money mostly by corporates and other borrowers. More the NPAs mean more loss of taxes, depositors and other stakeholders money and there is no justification in finally writing off the losses. The business of banking is based on public money and business should be run on professional and commercial lines. Borrowers cannot expect to run their business using depositors' money ruthlessly and without adhering to the discipline expected of them. Economic Slow down may be a cause for business failures but the failures cannot be fully accounted for by business failures. Bankers also have to be blamed for recklessly lending throwing to winds basic principles of lending. The only way to prevent formation of NPAs and discipline the bad borrowers is to have a rating introduced for them based on their performance and conduct of accounts and levy a small penalty for deterioration in rating. This way borrowers will be disciplined and banks will have funds collected from bad borrowers to cover up the NPAs over a period. Other stake holders will definitely welcome such a move.

Dr.T.V.Gopalakrishnan

( This comment appeared in ET dated 23/11/12).

A Sandy Solution for Bihar's Coffers

Dr.T.V.Gopalakrishnan says

The author's suggestion is excellent and makes sense in tackling the sand shortage experienced in various states and the law and order problem caused by land Mafia. The solution offered also benefits Bihar in many ways by enabling it to augment its revenues and finding adequate resources to take care of its other pressing needs. The economy needs integration of policies which benefit the various states in different ways. Labour shortage is felt in most of the southern states and the north easter states can make use of their surplus labourers by sending them to south with proper coordination with various state authorities. This way sharing of surpluses mutually among the states will find solution to many of the problems faced by various states and the benefit is for the entire economy, society and the nation. The author deserves special kudos to have come out with a good suggestion. Will someone look into this?

( This comment appeared in Times of India dated 18/11/12 in response to an article A sandy solution for Nitish's Coffers)

Provide at least some toilets for common masses

Dr.T.V.Gopalakrishna (Mumbai)says:

November 18,2012 at 11:54 AM IST

The author deserves all kudos for having come out with a suggestion to have a Latrine Policy for the nation.Mr Jairam Ramesh was right when he made an observation we require more Toilets than temples.It is really a shame that such topics come to the fore for discussion openly as the nation has miserably failed to provide the basic facilities to its people after 65 years of ruling by Indians after independence. Bangalore the city known as California for its IT revolution and having Internationally well known Technocrats and billionnaires is still not having adequate toilets for its labour force and many of the less fortunate people. It is a common sight in the morning hours to see people with mobile on one hand and a bottle of water on the other hand moving to open places left for development of Gardens and community centres for their toilet needs. One wonders after 65 years of independence and having earned the status of fast growing economy and having the potential to attain the super economic power of the world , how the very basic needs are not met. The econoomy is looted left and right but the looters can spend part of the money to provide common toilets which will be well appreciated. and loot will be to some extent justified and tolerated.

This comment appeared in Times of India dt18/11/12 in response to an Article India needs a Latrine Policy in Times of India.

Abolition of CRR and RBI Balance Sheet

The article carries the strong defence in favour of not paying interest on CRR balances.SBI's Chairman's observation that CRR is a waste on the economy is something very strange and it only indicates that he cares more about SBI's balance sheet than the Economy's balance sheet which broadly reflects on RBI's balance sheet.The author has explained very well the importance of CRR as a monetary control tool and the need for the Govt to restrain on its fiscal flamboyancy.Strong RBI balance sheet is only a reflection of the weakness of the economy and this needs to be appreciated both by the Govt and the banking system.No doubt the economy should grow and that is the common objective of the Govt, RBI and the banking system.But to ensure growth, the economy needs a strong financial system and sound fiscal policies and RBI as a responsible Central Bank of the country has a role to play taking the interests of the economy and its people.Inflation if brought under control, it will benefit all.

from: Dr.T.V.Gopalakrishnan

Posted on: Nov 16, 2012 at 09:32 IST

 (This comment published in BusinessLine is in response to an article Not the Right Time to abolish CRR appeared in B/Ldt 16/11/12.)

The need to regulate Domestic Work

Comments:

The article reads well and has highlighted the need to recognise the domestic workers importance and bring them under proper legislation and regulation.Sincethe liberalisation of the economy in the 1990s and with the invasion of Information Technology, there is a boom in the construction activities and related services,auto industries and things like that. This has resulted in the migration of labourers from the rural areas to urban and metro politan centres.The demand for domestic servants has increased manifold and their wages have taken a steep hike whether recognised or not officially.Of course they are not formally organised,but in metro centres like Bangalore,Mumbai etc,they are informally organised for good though the exploitation continues unchecked or noticed.As rightly said,the womenfolk form the majority of the domestic help but it has some negative social implications as many of their men folk remain unemployed and resort to a life socially undesirable and needs Govt's care

from: Dr.T.V.Gopalakrishnan

Posted on: Nov 16, 2012 at 10:41 IST

This appeared in Business Line dt16/11/12 in response to an article  Changing Patterns of Domestic Work in Busiess Line dated 12/11/12)

Asset Liabilities

This refers to the edit “Worsening asset quality” (November 12). The deterioration in the quality of assets may be partly due to the downtrend in the economy, but the same cannot be taken as a matter of consolation for banks and stakeholders of banks. The seeds of non-performing assets (NPAs) are sown during the boom period when banks expand credit, throwing caution to the winds all appraisal standards. Borrowers take full advantage of this liberalised approach of the banks. The only way to curb formation of NPAs in banks is to discipline the borrowers by strict appraisal standards and close monitoring of loan accounts. They need to be rated based on their conduct of loan accounts. Banks should levy a small fine when their performance deteriorates. As it is, the cost of maintaining bad accounts in banks’ books is debited to the profit and loss account, which is at the cost of depositors’ interest and other stakeholders’ share of dividend.

T.V.Gopalakrishnan.
( This letter in response to an Editorial Worsening Asset quality in Business Standard dt 12/11/12 appeared in BS dated 14/11/12).