Recent Media Responses: M G Warrier

Recent Media Responses
(May-June, 2019)


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  


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

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

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


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


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

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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