This is typical of a commercial banker always thinking of investment and making profit. He forgets for a moment that if commercial banks are allowed their way, many may not exist to make that investment and profit. So many King fisher like companies would take the hard earned money of small people which are kept as deposits with the banks and vanish from the scene. Mr Choudhari should go back to his own banks, balance sheet and observe that the bad debts written off by the bank and the NPAs of the bank had been avoided, more metros, more roads and more infrastructure, the economy would have got. If the entire banking system's bad debts write offs and NPAs are avoided by better functioning, the fiscal deficit could have been easily wiped our in one stroke and the economy would be running a surplus. Earlier such bank executives leave the system the better for banks and the financial system to have some semblance of stability and soundness.They are not matured enough to appreciate the efficiency and effectiveness of the regulatory system despite having witnessed the financial turmoil the advanced economies has faced in the year 2008. Such top executives act as a hindrance to transmit the monetary policy mechanism as they never act in letter and spirit as the Reserve Bank as a worldly recognised regulator and promoter of sound banking and financial system desires. This is unfortunate and the governor has not been lucky enough to have the backing and support of major bankers. Even some of his own lieutenants seem to be not in agreement with his way of thinking in policy matters as is made out and reported in media. With all these, the RBI has been a success in maintaining its status as a good regulator and a central bank.
- Dr.T.V.Gopalakrishnan
2 comments:
Read this IMF view reported in HBL on February 7:
“..with the Fund estimating that a 10 percentage point reduction in the effective SLR likely lowering the borrowing costs for the private sector by around 100 basis points(BPS), while increasing the borrowing costs for the government by 50 bps over the medium term.
IMF contends that reducing the effective SLR by 10 percentage points would reduce foreign borrowing by corporates by around four per cent in the medium term.”
I am leaving it to the readers to guess whose brief IMF is carrying. We will soon hear an echo of whatever is contained in the IMF note from the North Block despite feeble objections raised by Rakesh Mohan and Janak Raj.
It is unfortunate that despite being the head of the largest public sector bank, Shri Choudhuri talks like the accountant of a urban bank which is more interested in making money by lending money regard less of the purpose of the loan andbackground of the borrower. I fully agree with the views of Dr. TVG that earlier such executives -who do not have regards for regulatory prescriptions, leave would be better for the banking system. If the amount kept under CRR is also placed at the disposal of banks, it will go the same way as rest of the deposits have been deployed and a part of it would ultimately become NPA or written off. If something happens to the banking system as a spill over effect of international events, where the money would come from to support the banking system. CRR money acts as a cushion, injects liquidity in the banking system as and when it is needed and is an important monetary policy measure . By criticising CRR, Shri Choudhuri ,it seams , is playing more to the gallaries rather than doing any service to the Indian banking system. Perhaps, he may be having some different designs and continue to find fault with RBI’s actions so as to fulfil his ambition.
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