Recent Media Responses: M G Warrier
Recent Media Responses
(May-June, 2019)
1
Final diagnosis
This refers to the report “Govt must provide capital to the banks on
upfront basis: United bank CEO” (Business Line, June 15). It is comforting that
since 2016, GOI and RBI have been handling the health issues of the financial
sector with all the seriousness they deserve. The problems have aggravated and
solution lies in overhauling the system equipping it to meet the expectations
of all stakeholders.
From restoring the trust of savers to ensuring uninterrupted credit flow
at reasonable cost to all sectors of economy across urban and rural areas, the
task before the system is multi-dimensional. Political leadership is responsible for
converting banks as agents for implementing popular schemes irrespective of
their feasibility and viability and luring industrialists with soft credit. The
institutional system including the supervisors and regulators also need to
share the blame for the laxity in appraisal of loan proposals, inadequate
follow-up and recovery efforts, encouraging external arms for doing own
business to save on establishment expenditure and so on.
The present efforts by GOI, RBI and the institutions in the financial
sector to retrieve the system from destruction are commendable. To ensure that
the banking system remains healthy hereafter, professionalism should be infused
at every level and political interference in policies once formulated should
stop.
M G Warrier, Mumbai
2
Rates and liquidity
This refers to Anup Roy’s report on
“Liquidity management tool” (Business Standard, June 14). While individual
measures by RBI for infusing liquidity in the system or mopping up excess
liquidity depend on the perception of the central bank, recent years have seen
more transparency and clarity in the monetary policy stance.
A change in base rate by itself
doesn’t mean much for the economy in the Indian context, as the banking
system’s dependence on RBI is not significant. Though substantial analysis and
media response follow each bimonthly monetary policy announcement by RBI, a cut
in base rate by, say, 25 basis points in base rate is not accepted as an
expression of expectation that banks will reduce lending and deposit rates by
quarter percent or near-about. Banks may be aware of this expectation. But
there are market realities. Banks’ term deposit rates have some relationship
with government’s own savings schemes
like Provident Fund and National Savings Schemes.
There is no denying that there exists
a case for reducing lending rates, by reducing the need for high margins. If
margins have to come down, efficiency in fund management, recovery rate and
overall discipline in the financial system should improve. Here, RBI will
expect support from policy makers and judiciary.
Once the lending and deposit rates get
aligned to base rate, other rates including bond rates and call rates will fall
in line.
M G Warrier, Mumbai
3
NPS exposure
This refers to the report “PFRDA official: 75% of NPS’ Rs1270- cr
exposure to IL&FS marked down” (Business Line, June 5). For an asset-base
of Rs3.2 lakh crore, Rs1000 crore in red may look manageably low. But, for the
Indian pension fund which is managed under multiple regulatory guidelines and
is under pressure to maintain credibility and trust as the game is with the
retirement corpus of people who have nothing else to fall back post-retirement,
stakes are high.
Government at the Centre has to look at infusing professionalism in fund
management seriously. Whether it would be admitted openly is another matter,
but the manner in which government has been influencing fund management by statutory
bodies, banks and organizations in which GOI is a stakeholder during the recent
past was not guided by professionalism.
It is the government’s responsibility and right to decide the policy for
resource management where public funds including bank deposits are involved.
But it is also necessary to build public trust about the safety of such funds
by having a transparent policy framework to ensure the safety, security and
appropriate liquidity levels in fund management. For pension funds, perhaps
government could consider legislating for investment of the entire corpus in
G-Secs guaranteeing reasonable return on funds invested.
M G Warrier, Mumbai
4
Accept Hindi
Apropos V Jayaraman's
letter “Learn Hindi” (Business Standard, June 6), the South's aversion to Hindi
has a post-Nehru era origin, when a fear-psychosis about compulsory imposition
of Hindi enveloped the non-Hindi-speaking states. Till then, the three language
formula (Mother tongue, English and Hindi) was under implementation across the
country with reasonable success.
The Dakshina Bharath
Hindi Prachar Sabha based in Chennai was and is still doing commendable job in
propagating Hindi in the entire south. Most of the literate south Indians have
working knowledge of Hindi. The best option today would be to revisit the three
language formula, guiding all citizens to familiarize three languages including
English, Hindi and a third Indian/Foreign language.
The social media users
in India have mastered the art of using English or Devanagari scripts for
communicating in any language of their choice. Even if not perfect, Google
helps in translating content from one language to another.
As a long term
objective, guiding some of the Indian languages other than Hindi to accept
Devanagari as a second script may help people to communicate with more ease. To
start with, languages like Bengali, Punjabi, Gujarathi, Malayalam and
Telugu may try this on an experimental basis. This is not anything new, as
English alphabet is being used by other languages world over.
M G Warrier, Mumbai
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5
Nirmalanomics
Apropos Archis Mohan’s report “Time for Nirmalanomics” (Business
Standard, June 1), admittedly putting together Team Modi 2.0 in record time
must have been an equally tough task for the NDA leadership as steering through
Elections 2019 with a comfortable majority. One is tempted to compare the choice
of ministers to the selection of experts to man the strategic portfolios in the
first EMS Namboodiripad ministry in Kerala (1957, Finance: C Achutha Menon,
Law: V R Krishna Iyer, Education: Prof joseph Mundassery, Health: Dr A R
Menon). Modi’s selection of Nirmala Sitharaman for Finance, Subrahmanyam
Jaishankar for External Affairs, Ravi Shankar Prasad for Law and Justice and
Amit Shah for Home made the thoughts wander in that direction.
With a strong ministry in place, building trust in the minds of people
and ensuring consensus in approach to handling major issues staring at the
government should be the next priority. One option before the government would
be to seek opposition’s cooperation to keep the regular morning rituals in both
houses of parliament leading to disruptions as an end of the day activity to be
taken up only after completing each day’s scheduled business, The reference is
to ‘Call Attention Motions’ and other opposition-led activities leading to
adjournments of sessions in the forenoon.
M G Warrier, Mumbai
6
Quality jobs
Apropos “It’s about high quality jobs” (Business Standard, May 30), the
thoughts on quality jobs could not have been aired at a more appropriate time
in the Indian context. Absence of professionalism in performance of jobs was
never as evident as in the recent past in our country. Right from leadership
roles in political organizations responsible for governance to the ‘Anganwadi’
where kids get their first lessons in choice of toys or food habits, we have
amateur artists acting major roles.
Today, the political will to enforce change and the people’s mandate to
overhaul the entire system have surfaced. We need to take full advantage of the
changed environment. We do have the resources, we have the manpower and India
is willing to accept the challenge of breaking away from the mindset of
laziness and inefficiency.
It is now for the new government in New Delhi to rise to the occasion and
initiate measures to ensure:
(a)
Improve literacy level across the country
to those already achieved in states like Kerala.
(b)
Evolve an education policy which will
strive for supply of enough skilled professionals in all sectors including in
political parties.
(c)
Evolve a well articulated and workable
prices, wages and income policy which will ensure cost-based farm gate prices
for agricultural produce, global market-linked prices for industrial
products and a wage system which will
factor in living wages and cost of post-retirement life.
(d)
Mapping and mainstreaming of nation’s resources
like water, land and other assets irrespective of ownership.
M G
Warrier, Mumbai
7
Policy continuity in RBI
This refers to the report “RBI turns down dilution of SFB listing norms”
(Business Standard, May 29) by Hamsini Karthik. Small Financing Banks (SFBs)
are an evolving category in the Indian banking architecture. Any new sub-sect
in the institutional system, especially in the banking sector, will take some
time to stabilize.
The report, prima facie, gives an impression that RBI’s rigidity stands
in the way of the smooth functioning of SFBs, in general. The observations
like, ”Governor Shaktikanta Das refuses to budge from stance taken by Urjit
Patel” and statements like, “The RBI does not have a precedent of modifying
licensing norms and, therefore, to uphold their sanctity, it will not entertain
such a request from SFBs,” attributed to an unidentified source, give an
impression that, RBI’s policy approach is guided by ‘precedents’ and
personalities, rather than merits of the issues under consideration, which is
not the case here. The institution has a history of policy continuity and
listening to voices of dissent for policy correction.
While the media has every right to analyze policy prescriptions and point
out anomalies or flaws, perhaps it will be in public interest not to ‘lobby’
for the benefit of individual cases questioning the institutional wisdom of
organizations or by giving an impression that RBI’s policy is dependent on the
person who heads the institution.
M G Warrier, Mumbai
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