Warrier's Collage on May 27, 2025

Welcome To Warrier's COLLAGE On May 27, 2025 Friends This brief midweek edition is to cover current issues. Happy Birthday to all readers having Birthday this week 🎉 Regards M G Warrier A RBI surplus income transfer to GOI My response to The Hindu Business Line editorial on May 26, 2025 Balanced view This refers to your editorial "Fine balance"(HBL, May 26). This is the first balanced analysis about RBI's surplus income transfer to GOI for FY2024-25. While RBI is making efforts every year to be more transparent in its accounting practices, some quarters attribute motives to GOI expectations about receipts from financial institutions government owns to finalisation of income and expenditure statements by such institutions. Sometimes such gossips border irrelevant speculation. We need to appreciate RBI for gradually introducing more transparency in the appropriation of its surplus income. So far, inadvertently though, an impression was created in some quarters that some bargaining happens between the owner (GOI) and RBI about the amount of surplus income to be transferred by the Bank to GOI. Actually, since Raghuram Rajan (Rajan was RBI Governor during 2013-16) days, RBI is shown in a bad light by media and GOI spokespersons, almost alleging that there's a difference of views between the government and RBI about the appropriation of RBI's surplus income (for valid reasons the word profit is avoided). The position was further damaged by Raghuram Rajan by obtaining a report from the CA member on RBI's Board then, to the effect that RBI had adequate reserves for 3 years (RRR's appointment was for 3 years!) and transferring the entire surplus income to government during 2013-16. It's a fact that RBI is doing substantial financial business on behalf of its owner outside core central banking functions and some of them are prone to fluctuations in generating profit and/or loss. Given the size and nature of such business including management of forex reserves, an ongoing dialogue between GOI and RBI about sharing of profit (and making good losses if incurred) is justified. When almost a dispute surfaced on the adequacy of RBI's internal reserves, Jalan Panel was set up and prudential norms for maintenance of reserves by RBI were suggested by the panel and accepted by RBI. As envisaged, this year RBI has reviewed the position in the context of changing global risk perceptions and rightly raised the upper limit for reserves by one percentage point to 7.5 percent of balance sheet size. The old adage that RBI earns profit when government's financial position deteriorated does not hold good today. A substantial portion of RBI's income comes from areas outside government borrowings. Being conservative in approach to investment risks, rightly so, RBI's funds deployment policy is guided more by safety of assets than generation of income. Still in the recent years Bank's income has seen an uptrend and as a result the amount of surplus income available for transfer to GOI is also increasing. M G Warrier Mumbai B Book on my table Heart Lamp: Selected Stories | WINNER OF THE INTERNATIONAL BOOKER PRIZE 2025 https://amzn.in/d/fog6zYD WINNER OF THE INTERNATIONAL BOOKER PRIZE 2025 In Heart Lamp In Heart Lamp, Banu Mushtaq exquisitely captures the everyday lives of women and girls in Muslim communities in southern India. Published originally in the Kannada, these portraits of family and community tensions testify to Mushtaq’s years as a journalist and lawyer, in which she tirelessly championed women’s rights and protested all forms of caste and religious oppression. Written in a style at once witty, vivid, colloquial, moving and excoriating, it’s in her characters – the sparky children, the audacious grandmothers, the buffoonish maulvis and thug brothers, the oft-hapless husbands, and the mothers above all, surviving their feelings at great cost – that Mushtaq emerges as an astonishing writer and observer of human nature, building disconcerting emotional heights out of a rich spoken style. Her opus has garnered both censure from conservative quarters as well India’s most prestigious literary awards; this is a collection sure to be read for years to come. C RBI Balance Sheet Back to Basics https://www.moneylife.in/article/strengthen-rbis-balance-sheet/28360.html This article was published in 2012. Being shared in the context of recent discussions about RBI's surplus income transfer to GOI. SS Tarapore pleaded for a strong RBI till he left this world in 2016. Tarapore wrote the forword for my first book now available in eBook format titled "Chasing Inclusive Growth" : Chasing Inclusive Growth: Reforms for Financial Inclusion : https://amzn.in/d/7cdvoMg