Weekend Lighter: Privatizing Public Sector
Weekend Lighter: Privatizing Public Sector
(March 24, 2018)*
*Next issue of WEL will be from Thiruvananthapuram
Privatizing public sector
This refers to the article “Why privatize banks?” (Business Line, March 8). Srinivas Dindi, in his short but thought-provoking piece has covered several aspects which do not justify further privatization of banking business in India at this juncture.
Let us concede that in India, since Nehruvian days, when ‘public sector’ commanded much more respect than today also, there has been a sponsored lobby out to annihilate public sector undertakings by any means available. We have witnessed the fall of institutions like UTI.
Methods used included creating legal hurdles in parity in functional matters with the private sector, ensuring weaknesses in top management by interference in top-level appointments and HR issues using Government’s ownership rights and sometimes by allowing infiltration of people of doubtful integrity at higher levels.
As regards banking in India, as the source of funds and the clientele served by the public sector and private sector banks are the same, there should not have been much difficulty in providing a level playing field for both categories of banks.
But, in reality, only the private sector banks enjoyed functional autonomy to do business on their own terms (choice of clientele, freedom to operate where they want, no interference in HR-related matters including top-level remunerations and so on) within the overall contours of legislative restrictions.
Public sector banks are made answerable to their masters in Finance Ministry, accept responsibility for providing credit for all government-sponsored programs and ensure G Secs are fully subscribed whenever central and state governments entered the market. Of course in making government borrowings successful they have other public sector organizations like LIC which are expected to support the government on an ongoing basis.
By privatization, are we talking about handing over the banks to Mallyas and Modis who are running away with banks’ funds? Or are we aiming at professionalization of Indian Banking System, irrespective of ownership? These are choices to make fast. Time is running out.
Owner and regulator
Recently, “Check for fraud in NPAs above Rs 500 mn: Govt” was a headline in newspapers. On the face of it there is nothing extraordinary in ‘owner’ of a business giving operational instructions to the staff working under him. GOI as owner, has the responsibility to ensure smooth functioning of PSBs and the recent developments have shaken the public trust in PSBs, which need to be restored quickly.
But in the given situation, the divergent instructions flowing from GOI and RBI will confuse the already strained managements of PSBs. More likely, they will start waiting for instructions from North Block even after getting operational or supervision-related instructions from RBI, as it is the Finance Ministry which decides the fate of the top management in PSBs.
This is an embarrassing situation for the country’s central bank which shoulders the responsibility of working under the RBI Act and administering Banking Regulation as legally mandated under the Banking Regulation Act,1949.
If GOI is not comfortable with the speed with which instructions are percolating down to banks from RBI, they should have a dialogue between them (GOI and RBI) and sort out issues. It is not in public interest for the two being seen talking differently and GOI sharing concerns in the media even before taking the banking regulator into confidence. Owner and Regulator have different kinds of responsibilities. Earlier this is conceded, the better for the image of the Indian Financial System which is already sagging. If banking gets affected by ego-related issues, the fall will be total and there will not be any public sector-private sector divide.
What prevents PSBs overhaul?
Who are preventing a wholesale overhaul of PSBs to bring them on par with the best among the world class commercial banks? They include the rich and the powerful who own and operate governments in India, mainstream media houses and private sector business who depend on laxity in appraisal of loan proposals and recovery arrangements in PSBs.
In the PNB episode which have triggered the present debate, one can decipher the soft corner the lobbies against PSBs have for those who have looted the banks and brought disgrace to the Indian Banking System. The pressure on government to bring to books the people who swindled money is conspicuous by its absence. The effort is to divert attention to procedural lapses or shift the responsibility from one shoulder to the other.
Why not build up a case for recovery from the borrowers, if necessary by changing laws? No, the motive is to shed tears for taxpayer or depositor while those who have looted banks get more time to hire better lawyers or idle away time till a change of government will help them out. Remember, these borrowers who account for a major portion of PSBs’ NPAs have several pockets and only some of them are empty!
Where the buck stops?
This refers to the piece “PSBs: Buck passing between RBI and MoF” by Debashis Basu (Business Standard, Irrational Choice, March 19). I quote below the concluding portion from my article* on corruption published in moneylife.in during September 2012:
“I am convinced that unless the people, who do not directly participate in the affairs of legislatures, executive and the judiciary, those in the media and those who are part of these three wings, but are silent spectators to the goings on, due to various compulsions, do not come together to oppose corrupt practices across government and public and private sector organizations, the present situation will get perpetuated. This is not an ill that can be cured by another institution like Lokpal or by debates in parliament.”*
So, the buck stops at the doors of “WE THE PEOPLE”. The concluding paragraph of the article also points to the absence of pressure on those who have power and responsibility to prevent corrupt and unethical practices in governance to exercise the power with responsibility without fear or favor.
RBI Governor in his March 14, 2018 speech accepted responsibility and assured action to overhaul the system. On different occasions, previous RBI Governors also have aired discomfort about the dual control of PSBs. It is not even the GOI, but the lower level Babus in the Finance Ministry who feel that they ‘own’ the financial sector and create roadblocks in the smooth functioning of supervisory and regulatory bodies including RBI. We lost precious ten years because of the hijacking of the Financial Sector Legislative Reforms Commission (FSLRC) by vested interests. Earlier India understood the spirit of the concerns expressed by Dr Urjit Patel on March 14, the better for the country.
M G Warrier, Mumbai
*This appears as the last chapter in “India’s Decade of Reforms: Reserve Bank of India at Central Stage” published by Notion Press in 2018.
Trump as a symbol
This refers to “When nations decline” (Weekend ruminations, March 17). The short piece has covered several concerns of people across geographies which usually get swept under the carpet while editorials and columns are written in the mainstream media. Unpalatable truths are always reserved for special occasions and are told in bits and pieces. Though briefly, Ninan has opened up and perhaps a debate may follow.
It is not comfortable, being reminded about history, especially for those in power. But we are passing through a time when, forgetting history can be more harmful than any other time in world history. Today “Trump” doesn’t carry extra value than any other card in the pack. Thanks to the idea of strength developed post-World War II by those who thought that they had won the war, no nation in the world takes ‘powerful’ countries seriously. A nation with $20 trillion public debt cannot boast much about the size of its GDP or boss over the nations whose purchasing power its economy depends for survival.
Unfortunately for the rich and the powerful, today the poorest in the world is aware why he is remaining poor and is able to tell the richest in the world that distributive justice and equality before law are integral parts of peace for individuals and nations. Creating islands of peace and prosperity is going to be tough as the current century progresses.
Back in India, “WE THE PEOPLE” have started giving signals to the effect that democracy is much more than occasional elections and those who elect governments are willing to monitor the governance on an ongoing basis. Earlier the political leadership wakes up, the better for the nation.
M G Warrier, Mumbai
Use and abuse of social media
View : “Erasers are made for those who make mistakes.”
Counter view: “Erasers are made for those ‘willing to’ correct mistakes”
Quoted above is from a mail I received from my good friend Badri. Badri has a special skill to select quotes which are not ‘controversial’. Here, the counter view doesn’t reject the first view that erasers are made ‘for those who make mistakes’, but just sends out a message that the ‘use’ of eraser is for those who correct things the moment they realize that something has gone wrong. Badri says it is all about ‘attitude’. Same thing about social media, or any media for that matter!
All along, media, print, audio (you have forgotten ‘Aakashvaani’, I can’t afford to forget!) and visual have been playing a positive role in educating society, correcting policies and entertaining people. Side by side, there was abuse of media for spreading rumors/scandals, destroying institutions, bringing down governments and so on. We have heard a lot about ‘paid news’, leaks, use/misuse of Right to Information by media for different purposes (both positive and negative) and so on. Then what is ‘new’ about social media?
The present position of social media is like, every individual who can use a mobile has a ‘political party’, ‘government’ and media (audio and visual) under her/his control, irrespective of the person’s age, maturity, literacy level or even ‘soundness’ of mind. Or that is the impression s/he creates in the minds of people who interact with her/him. This is an alarming situation.
Think of a five year old using his grandfather’s mobile and transferring funds from the old man’s bank account to an unknown person’s account by just following the instructions coming on the mobile. Or me, getting a call from an insane person asking me to transfer a particular amount to a specified account to save ‘X’ whom I know, but have not been in touch with, for some time. It’s not just monetary.
Abuse of electronic media at various levels by miscreants for several anti-social purposes is on the increase. And, believe me, we are not going to get law or regulations in place which will provide blanket insulation from the harms this monster can do in our day to day life. Still, there is hope and before discussing options to minimize the possibility of our becoming the ‘victim’ of frauds, let us examine the modus operandi of fraudsters in a couple of other instances.
Till the end of last century, duping people was a time-consuming activity. Remember the chit funds, Multi-Level-Marketing schemes (MLM), IPOs, various discount offers, installment schemes and other money-multiplying activities in which some of us or our friends have lost money. By and large, the cheats were identified fast through word of mouth and losses were restricted to certain groups of people or some geographical areas.
But, crores went down the line, sometime back, in a ‘mobile phone for Rs251 offer’ several people across the world are losing money every day by responding to phone calls or mails offering huge amounts against payment of ‘handling charges’ or ‘initial expenses’. Most of the offers come through messages from ‘unknown’ entities. In the recent past, quickly following some reports about fraudulent transactions using debit/credit cards, bank account holders started receiving offers over the telephone to ‘insure’ card transactions against payment of a ‘small’ fee. The promise from the other end of the phone was, once ‘insured’ any loss incurred by using debit/credit cards will be made good. It turned out that there was no such real scheme.
Through social media, many things are offered free. Use of WhatsApp for several purposes, I am told, is free (Disclaimer: I don’t have a WhatsApp account yet!). When I am using a mobile/internet connection provided by ‘Service Provider X’, a caller on behalf of ‘Service Provider’ calls me and asks me about the last monthly bill I paid for the mobile/internet services. First, thinking that the call is from ‘X’, I answer some questions. Then, I am told that the call is from ‘Y’ who will arrange for shifting my account to his company, ’free of cost and without change of number’ after which I will be paying much less for the same services I use. That is ‘aggressive marketing’ in the digital world, my daughter tells me.
We can’t run away from technology or the gadgets and services that make our lives ‘more fulfilling’.
My request to those who spend more than 2 hours a day accessing ‘social media’ (for this purpose, traditional print and electronic media excluded) is: “PLEASE CHECK AND ENSURE THAT YOU ARE USING COMMONSENSE THE SAME WAY YOU WERE USING IT DURING THE LAST DECADE!”
Ravana's annihilation was not possible without the grace of Shiva, whose staunch devotee was Ravana. Rama prayed Shiva as instructed by sage Agastya. Lord Shiva appeared before Rama, and started preaching what is known as 'Shiva Geetha'
This incident is narrated in Padma Purana. Shiva Geetha is the basis for Bhagavatgita. Rama who listened to Shiva Geetha in tretayuga, incarnated as Krishna in Dvaparayuga and passed on what he heard from Shiva to Arjuna.
There is no mention of Shiva Geetha in Valmiki Ramayanam which talks only about 'Adiya Hrudayam' by Sage Agastya.
It is said that Valmiki composed nearly 100 crores of shlokas of which only 24,000 slokas are available. Perhaps Shiva Geetha is hidden among the lost ones.
Shiva Gita mostly resembles Bhagavatgita. We get the same type of vibrations. Just because Shiva Gita has not become popular, we cannot set aside the significance of Shiva Gita.
The 6th chapter in Shiva Gita reminds us of Krishna's self-introduction in Bhagavat Gita.
"I represent all directions. I am Gayatri and Savitri. I am Rig, Yajur, Saama and Atharvana. I am Ithihasa. I am Purana. I am deluge and creator of deluge too. I am light as well as darkness. I am greater than the greatest and smaller than the smallest" and so on.
7th chapter is about the Viswaroopam of Lord Shiva. Rama sees within Lord Shiva's mouth Vindya and Meru mountains, all Brahmaandas, Sun, moon and stars, all devas, rishis and Kinnaras, the Tripura Dahanam , and many future episodes including Ravana Samharam by Rama.
When Rama came to himself he saw Lord Shiva in his usual tiger skin garment with a trident.
All other details regarding human birth, Satva, Rajas and Tamo Gunas, papas, punyas and karmic influence etc are elaborated in other chapters.
Shiva Gita seems to be the basic thread out of which Bhagavad Gita was composed later.