WEEKEND LIGHTER: Viral on RBI's reserves
WEEKEND
LIGHTER*: Viral on RBI’s reserves
(February 25/26, 2017, No.8/2017)
Feel free to mail your views on this
edition of WL to mgwarrier@gmail.com
*Weekend Lighter is posted every
Saturday @mgwarrier.blogspot.in
Section III:The woman who cut off her
breasts
I
Cover Story
Viral on RBI’s reserves
RBI’s new Deputy Governor Dr Acharya
has clarity of views on issues like dipping into Reserve Bank of India’s
capital and reserves for funding GOI expenditure. Speaking on the sidelines of
the IBA’s Technology Awards event last week, he suggested that using a part of the Reserve
Bank reserves for recapitalising state-run banks may not be a good idea. Dr
Acharya was responding to queries in the context of a suggestion mooted in the
Economic Survey 2017 that the “Demonetization bonanza” that will result in an
assumed surplus income in RBI balance sheet should be used for funding
recapitalization of PSBs. He supported his observations against the proposal asunder:
“After an
assessment of the money required for handling various stress scenarios in the banking
system and the financial markets, the RBI transfers its surplus or the
dividend, to the government. Once it transfers the money, it is for the
government to use is the way it wants.
I
generally don't like to tie the two (surplus payment and allocation of the
money for a purpose) because then you are getting into a difficult situation
where you want to dip into the RBI reserves because you want to do something
else. Money is fungible and when you dip into RBI's balance sheet, you are
dipping into it for fiscal expenditure. My sense is that we have to keep these
things from an accounting perspective settled.”
It can be
recalled that when the suggestion mooted
in the Economic Survey 2016, was brought to his notice, Raghuram Rajan had also
opposed the idea.
M G Warrier
II
Recent responses
Management of stressed assets
RBI
is lucky to get Dr Viral Acharya, who is comfortable with the identity
"Poor man's Raghuram Rajan" as Deputy Governor at this point of time!
Access his February 21, 2017 speech in Mumbai on management of
stressed assets of Indian banks using the above link (@rbi.org.in)
My response
This refers to RBI Deputy Governor’s
speech on management of stressed assets of Indian banks (Report dated February
22) at the IBA event at Mumbai on February 21, 2017. It is comforting to find
that the transparent approach of RBI in policy formulation evolved during the
current decade is being further strengthened by Dr Acharya. The following
observations carry a significant message for all stakeholders:
“Only a bank that fears losing its deposit base or incurring the wrath of its shareholders is
likely to recognize losses in a timely manner. In many of our banks, such
market discipline is simply not present
at the moment. In others, even if some such discipline is at work, banker horizon is excessively short until end
of the CEO’s term.
Banks lobby for regulatory
forbearance; perhaps some loan prospects have turned sour due to bad luck, but beyond a point, concessions in
recognizing losses just ends up being a strategy of kicking the can down the road and leaving
them as legacy assets for the next management team to deal with. The
sectoral concentration of losses
substantially amplifies this problem.”
The message: RBI is not comfortable
with the ‘hit and run’ or ‘first aid’ approach to handling of problems faced by
the financial system and a comprehensive overhaul touching the structure,
resources and management is what would help it to come out of the current
situation.
M G Warrier,
Mumbai
Merge to grow
Apropos the report “SBI, 5 associates
to merge from April 1” (HBL, February 24), the merger has not come a day too
soon. Long back, when major private sector banks were nationalized or during
the early 1990’s when globalization, liberalization and technological
upgradation were accepted as part of growth strategy, rationalization of
banking infrastructure should have been prioritized. Vested interests and
narrow constituency considerations prevailed and things got delayed. Better
late than never!
Now that a brave step has been taken
to merge associate banks with State Bank of India, this initiative should be
followed up with other measures which will improve the health of the financial
system. These include:
(a) Merger of weak public/private sector
banks with strong banks either in the public or private sector which are
interested in expanding business.
(b) Rationalise branch network by
initiating enabling legislative measures for closure/merger of branches in areas
where there are more than necessary number of branches for historical reasons.
(c) Rationalise ATM network. Pooling of
ATMs will save unnecessary maintenance expenditure including security costs.
M G Warrier,
Mumbai
III
Leisure
Nangeli: The woman who cut off her breasts!
http://www.thehindu.com/society/history-and-culture/the-woman-who-cut-off-her-breasts/article17324549.ece
Use the above link to read the story “The woman who
cut off her breasts” by Manu S Pillai the author of award-winning book “The
Ivory throne” published in the Hindu Magazine last week.
Excerpts:
Nangeli too was recast. When Nangeli offered
her breasts on a plantain leaf to the Rajah’s men, she demanded not the right to
cover her breasts, for she would not have cared about this ‘right’ that meant
nothing in her day. Indeed, the mulakkaram had little to do with breasts other
than the tenuous connection of nomenclature. It was a poll tax charged from
low-caste communities, as well as other minorities. Capitation due from men was
the talakkaram — head tax — and to distinguish female
payees in a household, their tax was the mulakkaram — breast tax. The tax was not based on
the size of the breast or its attractiveness, as Nangeli’s storytellers will
claim, but was one standard rate charged from women as a certainly oppressive
but very general tax.
When
Nangeli stood up, squeezed to the extremes of poverty by a regressive tax
system, it was a statement made in great anguish about the injustice of the
social order itself. Her call was not to celebrate modesty and honour; it was a
siren call against caste and the rotting feudalism that victimised those in its
underbelly who could not challenge it. She was a heroine of all who were poor
and weak, not the archetype of middle-class womanly honour she has today
become. But they could not admit that Nangeli’s sacrifice was an ultimatum to
the order, so they remodelled her as a virtuous goddess, one who sought to
cover her breasts rather than one who issued a challenge to power. The spirit
of her rebellion was buried in favour of its letter, and Nangeli reduced to the
sum of her breasts.
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