RBI amends banks' regulatory capital norms in line with Basel III - Moneylife

RBI amends banks' regulatory capital norms in line with Basel III - Moneylife


Hidden reserves add to the strength of balance sheets of banks, corporates, individuals and institutions including governments. As a nation, India is blessed with a large amount of such reserves, which fortunately remain out of reach of ‘exploiters’. There is nothing ethically wrong in drawing from such reserves in times of need. 
I remember, when Goenka was confronted by media when The Indian Express was not able to keep due dates for repayment of certain deposits, he kept his cool and responded that only ‘liquidity’ was a problem and assets like Express Towers were there and depositors will be paid back by the company. More recently, there was a report about thousands of crores worth gold and jewellery with Sreepadmanabha Temple in Thiruvananthapuram. Referring to some old records a representative of the Trustees had told media that Maharaja of Travancore who had taken care to keep his assets untouched had also indicated that it was also the intention of ancestors to draw from those assets in times of need like famine and later replenish it in good times.
It is not a crime to productively re-deploy or to ‘account’ hidden wealth, whether it be land with Railways, real estate properties with PSUs, undervalued items in the balance sheets of banks or GOI’s stakes in institutions. But that should be done with a realistic Asset-Liability- Management approach. 

M G Warrier


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