New Bank Licenses and RBI

The need for new banks to increase competition and further spread of banking to cover more population particularly in unbanked areas is genuine and the recent move of RBI to issue new licenses is therefor welcome. The selection of banks for grant of new licenses all said is a difficult process although the guidelines have been very clear and there is no scope for ambiguity.But how to keep the corporates engaged in broking and real estate business away from getting licenses is a formidable task and the RBI will have a tough time in taking the decision. The risks in granting these corporates licenses are systemic and can have a adverse impact in maintaining the Financial System's stability. Both real estate and stock market deals are highly volatile and speculative in nature and the Corporates have the backing of high and mighty to prevent RBI in enforcing its regulatory prescriptions on them. Further financial inclusion is the desire and inevitable need of the Govt, RBI and the people , these corporates once given Bank Licenses will never be able to ensure compliance with this, as even the nationalised banks regional rural banks and private sector banks have miserably failed to achieve Financial Inclusion with all their rural spread and continued force from RBI. Once the license is given to such entities, withdrawal of the same will be a difficult process and minimising the spread of risks in the economy will become a task by itself. RBI has to think million times before the licenses are issued to Broking and real estate entities.( This comment appeared in Times of India dated 26/2/13.)

STT and cost of transaction

The argument that the abolition of STT on cash and derivative transactions in listed instruments could enhance volumes and improve market depth does not carry conviction and is not a solution either to reduce transaction cost or improve the revenues though capital gains tax instead of STT.The convenience of collecting STT and the inconvenience of collecting capital gains tax with all its disadvantages of tracking the transactions and arriving at the capital gains tax with room for ever ending disputes etc have to be weighed by the Govt before removal of STT. Further, the capital gains can be adjusted against capital loss which also can be disputed adding to the workload of both the IT administration and assesees. No doubt STT needs a flexible approach and this can vary for individuals and institutions with different cut off limits in the volume of transactions.To reduce the transaction cost, the brokerage,demat charges etc can be reduced considerably.

(This is in response to the editorial Costless tarding appeared in Business line dated 25/2/11).

who prevents from taking credible policy action

One hears always very high sounding words to improve the performance and remove all the ills of the economy.But who prevents whom in initiating the action to put the economy on growth trajectory is a bit confusing for the masses.The economy suffers the worst from corruption,black money,high inflation, poor corporate governance,poor growth in agriculture,manufacturing, infrastructure and connected services.Taxes have reached their peak and ordinary people are suffocating.Ethics and values have been given a go bye and at this rate people will forget the meaning of these words.It is time the leaders have a serious introspection and understand the suffering of the ordinary masses in terms of lack of adequate basic necessities of life.What they expect is action and not words soothing to the years.Hope wiser counsel will prevail and corrective actions are taken early to set right things and confidence of the people in their leaders is revived.Welfare of the masses be the only objective now.

  Dr.T.V.Gopalakrishnan

This comment is in response to the article credible policy action needed appeared in Buiness line dated 21/2/13.

Improve the services in Railway first.

Before introduction of new trains, it is better if the Minister improves the conditions and services in the existing trains. He has to do a few things to improve the image of railways and imoprove the services to customers. Some of the area he can concentrate relate to1. Reservation. With all improvements in the system of Reservation the fact remains that people do not get accommodation in trains and seats are going empty. There is some total mismatch between the availability of seats and allotment of seats.I have seen during my travels that many seats are vacant and people do not get confirmation of seats if they are in the waiting list. Something is seriously wrong.2. The toilets, beddings and curtains in the trains are in pathetic conditions and THEY really CAUSE health hazard. Some of the Doctors have openly advsed their patients to avoid bedding in the train as it results in some skin and eye diseases.3) Beggars and unauthoried vendors are freely moving in all compartments and adding risks to the passengers in temrs of risks of thefts, and health issues as many serve stale and hopeless food..4) Some of the stations are hopelessly maintained and they never care for passenger conveniences. They seldom make any announcement of trains arrival and departure and never display the position of compartments to enable passsengers to identify their coach postion and board the train comfortably.I had a very bitter experience in mADURAI JN   VERY RECENTLY.These are all some small but important concerns which the Railways should set right before additions in the number of trains are considered.

Dr.T.V.Gopalakrishnan
THIS HAS BEEN PUBLISHED IN tIMES OF iNDIA DATED 21/2/13.

Deteriorating Customer Service in Banks

This advice from the Dy Governor to Bank employees is commendable and deserves appreciation for his understanding of the deteriorating customer service in Banks.Things are so bad in some of the PSBs that even Customers' service to employees to make their job easy is not properly responded.The very approach even to customers who want to deposit some money is to drive away the customers even without seeing their faces.They pretend to be terribly busy and ask the customers some queries as if to comply with KYC norms and the moment they notice that customers have not brought the particular information, they will insist on thatand drive them away.Earlier the customer is driven away the better seems to be the approach and the officials are not bothered about deposits or advances or any other matter. Expecting customers to report complaints is not pragmatic and this is not workable.Even if some one takes the initiative,the experience may not be that encouraging.Hope the DG will pursue further

from: Dr.T.V.Gopalakrishnan

 (This comment is in response to an article Banks should focus on Cutomer Service appeared in Businee Line dated 19/2/13)

Super Rich and Tax

Super Rich will always argue on these lines as they are more greedy than average people.They do not understand or bother to understand the problems faced by the average people of this country.By paying a little extra tax their life style may not change even a bit where as by making the ordinary people to pay more out of their limited income, their living standards will get badly affected. As it is they are robbed of their earnings because of high inflation and many are not able to provide quality education to their children,take care of their own health issues,and their old aged parents.These things the super rich will not realise or understand as they have enough to spend  and mostly their expenditures are borne by others.Even the very thought of increasing the tax rate irks them and they outburst with silly arguments forgetting the fact they have made the money from the same society and they have a responsibility or  liability to pay back to the society when it needs.Time they introspect

from:  Dr.T.V.Gopalakrishnan

Posted on: Feb 19, 2013 at 09:15 IST 

(This comment in response to an Article Taxing super Rich will be counter Productive appeared in Business Line dated 19/2/11)

Poverty and Trade union

The Dy Governor is good at making some abstract expressions without giving any meaningful suggestions and support from the policy perspective where as What professor Amartya sen said in the same function carries some sense which the Dy governor should understand and do as a policy maker at a very senior level.Reserve Bank pensioners demand to update the pension for the last two decades has been kept pending for no valid reason and many are finding it difficult to make both ends meet in these days of ever soaring prices all around.Those who preach should be role models and what they speak should be convincing and acceptable.Poverty can be minimised to some extent provided the Financial Inclusion is made 100% succes which has not been happening as banks have been elusive and evasive to make it a reality.The Dy Governor has commented several times on this also but the fact remains that poor people have no access to banks.Charity begins at home is perhaps the message he should realise.

Dr.T.V.Gopalakrishnan

 

( This is in response to an article Trade Union can help Management to remove poverty appeared in Business Line dated 18/2/13)