Reality of financial inclusion is eluding - M.G.Warrier

 My View on "Financial inclusion: Banking the unbanked. A reloo...": 

Excerpts from my article "Surmounting the Unsurmountable" published in The Global ANALYST, December 2012:

"Post-independence and perhaps till the emergence of the LPG (Liberalisation- Privatisation- Globalisation) dimension in policy thrust at national level, circa 1991, agricultural and rural credit and financial inclusion received undivided attention from Reserve Bank of India (RBI) with support from Government of India(GOI). The period also saw extensive surveys and studies like All India Rural Credit Survey, All India Rural Credit Review, Committee to Review the Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) and the study by Agricultural Credit Review Committee (Khusro Committee, 1991). Initiatives taken by RBI and GOI in improving the institutional framework in the financial sector saw the emergence of State Bank of India, setting up of institutions like National Bank for Agriculture and Rural Development (NABARD), Industrial Development Bank of India (IDBI), Small Industries Development Bank of India (SIDBI) and Unit Trust of India. Measures like reviving cooperatives, Lead Bank Scheme which THE GLOBAL ANALYST significantly improved the outreach of commercial banks in rural and semi-urban areas and coordinated supports from different agencies involved in rural development, establishment of Regional Rural Banks, NABARD and SIDBI have all contributed to improved credit flow to small and medium borrowers in rural and semi-urban areas. Increasing the outreach of banks to cover the rural borrower with low credit needs has been one objective the nation has been pursuing religiously since 1950’s (when State Bank of India was established), till date (now SBI has come out with facility to open account with one rupee!). But the reality of financial inclusion is eluding. Banking system has done a commendable job in this direction through the network of rural branches, rural financial institutions (RFIs) including cooperatives, Regional Rural Banks (RRBs) and rural branches of commercial banks. The focus shifted midway, somewhere during 1990’s to urban and metropolitan lending." 

This article was covered by VITALINFO. 

Indian banking scenario and RBI’s new avatar

.........In the good old days the RBI played the role of a somber silent ‘Big Daddy’, as a supervisor maintaining monetary oversight by acting as ‘Banker to the Banks’.  It is rightly now said: “If collecting deposits and loaning it to the credit-worthy has become a tricky endeavour, the RBI as regulator has not been making bankers’ lives easier either, it has co-opted the banking system as its unwilling partner in trying to fix everything that is wrong with the Indian economy.”..............

Read - Moneylife

About turn

....... So, whatever it recommends, it will result in a very small number of licences, mostly to the big boys from industry and finance. No doubt the RBI will impose upon them conditions that would require them to open a certain number of branches in villages; but they are unlikely to revolutionize the moribund Indian banking industry. This is very different from what the earlier Mr Rajan envisaged. Power brings responsibility and makes people conservative; but did Mr Rajan have to do such an about-turn?

Read - The Telegraph

No cause for alarm on foreign bank entry

There is a view, particularly among the bank unions, that the foreign banks in existence in India have never fulfilled the requirements of the RBI, particularly regarding inclusive banking

Read - The Asian Age 

Know your bankers, the real ones

.......Stuck between the short-termism of a patronage-fuelled polity and the utopianism of economic liberalism, our system lurched towards a solution: pair the nationalised banking system with the balance sheets of the oligarchs to do heavy-lifting of development. Commercial banks were drafted in to do the work of long-term funding for large projects in infrastructure. When these banks inevitably proved too small, foreign debt filled the gap. It might well have come off, but the odds were heavily against it.........

Read - The Hindu

Only Rs 85 crore recovered in farm loan waiver scheme

.......The CAG, in a damning report released in March 2013, had noted that big farmers had tampered records, and banks had forged documents and manipulated figures to milk the scheme. Subsequently, the Reserve Bank of India and NABARD asked banks to verify all the claims of 3.5 crore farmers covered under the scheme, and recover money from ineligible beneficiaries by June 2013........

Read - DNA

Keep the Focus on Growth

The central bank should stay focused on growth, and not be sidetracked by inflation, which remains stubbornly untamed. It is the government that has to act to contain inflation , and some of the requisite action involves greater, rather than curtailed, investment, calling for accommodative monetary policy. Inflation in September has turned out to be marginally higher than in the previous month. Most people conclude from this that the RBI has now no room to lower its policy rates. The conclusion is gross, pun intended . A disaggregated view of prices would lead to a different conclusion........

Read - ET

A solution for inflation

.......The government - not the Reserve Bank of India (RBI) - is responsible for raging inflation on two counts: its inability to remove the supply constraints and the continuing fiscal deficit. Andy Mukherjee's article "Towards inflation targeting" (October 15) has targeted the monetary policy of the RBI for the continuing inflationary trends in the economy. This is quite a wrong diagnosis ..........

Read | Business Standard

Smooth operator Raghuram Rajan in America: top 10 quotes

Raghuram Rajan dubbed "The Guv" has lived up to his "rockstar" image by waxing eloquent on his maiden visit to the US as the Reserve Bank of India (RBI) Governor, saying he's no "superman" and there's "euphoria" surrounding him in India.......

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Regaining the growth momentum – issues and imperatives - Dr. K C Chakrabarty

Address by Dr K C Chakrabarty, Deputy Governor of the Reserve Bank of India, at the Sixth Annual Banking Conference “Bank on it, 2013”, organised by the Narsee Monjee Institute of Management Studies, Mumbai, 5 October 2013

....The first part of the topic, “Sustaining Growth”, raises the question “what growth do we need to achieve and sustain”? This leads us to the issue of “potential growth”. “What is the potential growth rate of the Indian Economy?” This question has been a subject of active debate in the academic and policy research circles. There are several methodological issues surrounding the estimation of potential output. Broadly speaking,.........

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Where are our economists? - Charan Singh

.......India needs a centralised research institution like the National Bureau of Economic Research, Cambridge, Boston, which encourages research and disseminates it across the country. There is a need to have close interaction between the Centre and the States, as well as the RBI, to build synergy between academic economists and policy makers. The authorities could advertise grant to undertake research in specific areas of economic research. The Indian Economic Association (IEA) could be strengthened with more regional and city chapters to encourage young and budding economists to start contributing to research efforts............

Read - HBL

Inflation pointers for monetary policy - Renu Kohli

... Given that this is the first time in India’s macroeconomic history that monetary policy is being guided by retail price trends that also capture services, in addition to the usual WPI inflation, there is need for careful treading at a point when demand destruction is evidently very significant..........

Read - Mint

Can ‘Yellen effect’ attract women to economics?

..........Many young women don’t seem to understand that economics is also for those who have broad intellectual interests and for those with research and policy interests in health, education, poverty, inequality, crime, obesity, the environment, terrorism or infectious disease. All students should be aware of the broad applications of economics when considering an undergraduate major.............

Read - Mint

‘If Push Comes to Shove, We Can Pay the World in Gold’: Rajan

......."Out of total short-term external debt that we have to pay for is ten percent of GDP. So, we have enough reserve to take care of that," he said speaking on the sidelines of the IMF meeting in Washington. "We bought over $60 billion gold last year. Sixty billion accounts for three-fourths of our current account deficit. If push comes to shove, we can pay the world in gold," Rajan added.

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India needs a national gold policy

.....Hence, neither the popular perception that the household purchase of gold constitutes physical savings nor the perception that it constitutes consumption by household is reflected in national income accounting. A 2011 working paper by the Reserve Bank of India highlighted this anomaly. Hence, it may be incorrect to treat valuables and, hence, gold purchases by households as GCF in the economy from technical as well as behavioural point of view (consumption, investment and social security motives)...............

Read - Mint

Villain in the Indian economy

My View on "Sadhu dreams of buried gold, government starts dig...": 

Why the Govt. is digging the empires of Kings who ruled India centuries ago. It will be better if Govt. digs the basements and farm houses of present rulers....I feel there will be lot more gold and black money in their custody....... 

K.S. WADHWA, RETD. PS, LUCKNOW

We must encourage more such dreams. I am sure, there will be more and more digging for gold wherever the yellow metal is hoarded. A mad mad dream could draw attention and put government into action than the following comments published online:

“Gold which no doubt is the villain in the Indian economy can be reformed into a saviour, if there is a political will to seriously go ahead with the following initiatives (the list is illustrative) which have already seen some beginning during the last one year:

• Make a realistic estimate of surface gold stock in India. Individuals and institutions holding gold stock above a threshold level should report the quantum of gold held to a designated authority.

• Insist on standardisation of a reasonable portion of gold held by institutions. Infrastructure for such standardisation should precede.

• Encourage financial institutions to increase their gold portfolio. Organisations including religious institutions should be provided incentives to deposit gold with banks.

• Establish a National Registry to keep track of inflow, stock and outflow of gold in various forms.

• Encourage introduction of gold-backed investment instruments.”

M G Warrier, Mumbai

Montek & Team yet to take view on Rajan report

....." We have not taken a view ( on the report). There has been a misleading commentary in some newspapers that some officials in the Planning Commission have commented on it," he said. There were reports that some Commission officials were against the Rajan panel's suggestion to replace Gadgil- Mukherjee formula with Rajan Committee's Multi Dimensial Index ( MDI) for allocation funds to states...........

Read - FPJ

Bajaj Finserv seeks RBI nod to float credit card biz

Bajaj Finserv has sought RBI's permission to float a credit card business on its own. The company has also abandoned its proposal to float a mutual fund and has drawn plans to have an intermediate non-operating holding company, should the group get a banking licence from RBI. Bajaj Finserv is one of the 26 applicants seeking a bank licence from RBI. ......

Read - TOI

Banks' loans, deposits grow slower so far Vs RBI's FY14 estimate

Mumbai: Banks' loan and deposit growth has been slower so far in the current fiscal year than the Reserve Bank of India's full-year projection, according to data released by the central bank...........

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Canara Bank launches a host of facilities

.........The bank, which has already extended e-sewa facility to Chamundeshwari temple for the benefit of devotees, installed an ATM, which was inaugurated by Mr. Dubey. He later launched the e-lounge facility, which was described as a step towards accelerating the bank’s initiatives to harness technology. The e-lounge is at the Jayalakshmipuram branch of the bank and offers all banking facilities, including cash withdrawal, cash deposit, passbook printing, fund transfer and online trading without any manual intervention, 24x7..........

Read - The Hindu