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,

Economics Over Politics.

The open fight between RBI and the Government is not in the interest of the economy, the nation, the ruling party and the RBI itself being a professional adviser to the Government and saviour of the entire financial system. The government and RBI have common and very laudable objective of ensuring fast and equitable economic growth keeping the welfare of all segments of the society particularly the farming community who is the real backbone of the economy and the society. Knowing this, both RBI and the Government have to have close coordination and understanding in enunciating policies and their meaningful and effective implementation. The whole world is watching and the international community particularly investors  and Institutions like IMF and world bank have a stake in understanding the placement of the EConomics over politics. 

Dr T V Gopalakrishnan

Food for serious thoughts

The Government's interference with RBI has started with the withdrawal of updating of Pension to its Retirees way back in 2007.Then the setting up of FSDC taking away RBI powers over the Financial system has dealt a deathblow to RBI' independence  This was followed by the appointment of additional Directors from the MOF as Nominees in RBI Board followed by demand of interim dividends and the entire surplus of RBI's income by the Government. Forcing two professional economists  Governors to quit was the final blow killing the Institution and taking away the Concept of independence of Central Bank .Less said the better about the way RBI is treated and the banking system is manipulated to suit  more the politics than the economics of the nation.The balancesheets of the Government and the RBI are getting weaker and weaker every passing day. Forget about the twin unhealthy balance sheets of the Corporates and the banks. They are weak beyond imagination. Good to hear some voices like Dr Reddy on the subject. Some intellectual satisfaction and food for serious thoughts. Good Economics and Good Politics cannot go together in a democratic set up is what it all indicates.  

Dr T V Gopalakrishnan     

RBI, the Government and the Manifesto.

The need to have a strong and independent Central Bank is paramount and essential to strengthen the economy and its financial system. An independent Central Bank is really a strong support to  the elected Government to perform and project its image nationally and internationally. The friction and simmering relationship between the Central Government and RBI if brought to market and public notice can only damage the image of both and bring more harm to the Government in the process as it would be  construed as failure on its own part to deliver as per its manifesto and pass on the buck to the central bank by dictating terms against established Prudence, Convention and Practices. The autonomy and health of the Central bank if ignored can have ripple repercussions on the Economy ,the Government and People. This has to be understood by the politicians in power and their supporting bureaucrats by introspecting and seriously pondering as to how the Central banks in advanced and major economies function and how independent and accountable they are to the Governments in power. No Central Bank can be a Department of the Ministry of Finance. BUREAUCRATS and TECHNOCRATS have  different roles to perform which are complementary to each other and beneficial to the Nation and all its stake holders.The Common objective is to have a well performing economy deriving the intended benefits as per the Manifesto of the Government in power  and keeping the Institution strong and enviable.

Dr T V Gopalakrishnan

RBI , Central Government and the Economy

Though the Central Government has over riding powers in terms of RBI Act, the Circumstances  that led to invoke the section 7 would require to be justifiable and legally tenable in national interest. As long as RBI seem to have  acted with reasonable prudence in national interest and RBI Board  which Consists of  only  Government  Nominees and Government appointed nominees  approve all actions of RBI the need to invoke section 7 of RBI will have to be convincing and legally justifiable. The fact that the issues under dispute are actions initiated by the RBI  in national interest and have the approval  of the Board, how the need to issue fresh directions invoking section 7 has arisen can be taken  only with a pinch of salt by the general public..The fact that Government has failed in keeping its balance sheet strong and there is a need to draw down the reserves of the Reserve Bank will not be convincing in the absence of a very serious national calamity requiring Reserve Bank  come to the rescue of the nation as a lender of last resort.. Definitely and fortunately such a bad situation has not arisen and there are some differences where the coordination and understanding between the RBI and the Central Government are missing. The issues  having come to public notice calls for a national debate involving matured politicians having established statesmen qualities, bureaucrats who have proven achievements to perform without any political bias, academicians of high caliber, legal luminaries , Economists and men of high social standing and character It is not the question of RBI's independence , but it is the question of failure of the whole administration in enhancing the quality of administration in developing the economy and strengthening the much needed  strong Financial  system and  its stability and long term sustainability. Even the RBI Act may require an amendment if the Government desires transfer of its reserves than what  has been originally indicated as per the relevant provisions. After all people are interested only in their welfare and Institutions like RBI are set up exclusively for that with a difference that their Board of Directors are appointed to perform certain specific functions based on their academic qualifications, professional expertise and well established caliber in public service  and not elected..to pass on some freebies to win over the  poor masses. RBI has so  far lived up to its expectations despite  several ups and downs and challenges from domestically and internationally. markets and earned its Recognition and reputation as one of the best performing Central Banks in the world. The credit goes to the Governments in power for allowing the Institution to function independently and in close understanding with the Government. This needs to be continued in the interests of the Institutions' strength, the Government , the economy and all its stakeholders.    .   

Dr T V Gopalakrishnan