RBI Governor Mr. Rajan has been doing excellent job for betterment of Banks and for Indian economy. He has taken many good steps during last one year of his tenure . He stopped rupee depreciation, he stopped loan waiver schemes, he stopped political exploitation and he did a lot to cure ailing bank .He has controlled inflation . He has not reduced interest to please corporate friendly politicians of previous government or current government. Continuous fall in interest rate during UPA rule caused disincentive to bank deposits and people started investing money in Gold or land which badly affected the health of Indian economy and GDP growth ..
Unwarranted and avoidable import of gold caused negative trade balance and started impacting adversely foreign exchange reserve. It is RBI Governor and Mr. Rajan who stopped Gold import . Unfortunately Mr. Chidambram while leaving office again permitted Gold import which has again caused Rupee depreciation and increased trade account deficit.
RBI Govrnor has to stop corruption in promotion of bank officers and corruption in lending. He should not be chosen for BRIC Bank. Government should help him in punishing corrupt CMD, ED and top officials of bank who have looted banks .He has to stop corruption in audit, inspection and vigilance department of various banks .RBI and GOI should take stern step to cure sick banks. They should learn lessons from outcome of forensic audit carried out in United Bank, U Co Bank and Allahabad Bank or Central Bank.
RBI should carry out account wise account audit of all advances above Rs.10 crore to expose the evil works of ED and CMD of PSU banks who damaged fundamental of banks just to please Ministers of UPA government and promote their own career.
Unless and until RBI and GOI learn to punish top officials for their evil work , the culture of bad lending will never stop and bank will continue to add new NPA every quarter. And when NPA will rise, profit will fall and again GOI will get a unjustified plea to deny wage hike to bank staff who are on agitation for last two years.
It is very sad that ten lac bank employees are denied wage hike for the fault of a few hundred top officials of bank, legal shortcomings and politicians of UPA government.
GOI should give good hike to loyal bank staff to make bank stronger. Due to low salary and continuous downfall in moral standards of top officials as also due to political exploitation , bank staff in general have lost enthusiasm to perform for their beloved bank. AS such it is the need of the hour to keep bank staff happy and only happy lot of employees can safeguard sick banks.
GOI has to learn to give value to real merit and real performer and learn to punish flatterers and bribe earners who are expert in manipulating figures and who are expert in delivery of good speech to please ministers and RBI officials. Only speech can not deliver good product. There are several CMD and EDs of the past ten years who completely exploited and damaged their bank to serve their self interest to develop close proximity with ministers
Don't Make Fortune Out of Poor: RBI Chief to Micro Lenders-NDTV
Mumbai: Asking micro-lenders to look at only a "reasonable profit" to sustain their business while serving borrowers at the bottom of pyramid, RBI Governor Raghuram Rajan has said that one should not think of making a fortune while serving poorest of the poor.
The comments come in sharp contrast to management guru late CK Prahalad's views in his book 'The Fortune at the Bottom of the Pyramid'.
The concept of the fortune at the bottom of the pyramid originally appeared in an article by Prahalad and Stuart L Hart in business journal 'Strategy+Business' in 2004.
That was followed by a book with the same title that discussed new business models targeted at providing goods and services to the poorest.
Microsoft founder Bill Gates, a philanthropist who has seen so far spent millions annually to help the poor, has described the book as something that offers an intriguing blueprint for how to fight poverty with profitability.
Dr Rajan, himself is a renowned economist, said during a recent micro finance event, "I think Prahalad did a disservice by saying that there is a fortune at the bottom of the pyramid.
"My sense is that you cannot, in good conscience, make a fortune at the bottom of the pyramid. Make reasonable profits, but if you start making a fortune, it does start raising societal anxiety about how the fortune is being made".
Following the advice of Prahalad, many companies across the world and especially consumer goods, auto and telecom marketers in the country, have begun to tap the underserved markets and made a big market out of them, Dr Rajan said.
He added however that reasonable profit must be there at the bottom of the pyramid as the business has to be self-sustaining
"If business is not self-sustaining, then entities will make a pretence of doing the business, but they are not really going to get engaged until there are profits," Dr Rajan noted.
The poor who want to borrow often face local monopolies, which in the long-run can be taken care of by market competition, but in short-run borrowers have to deal with it, Dr Rajan said.
"When they face local monopolies, then essentially we don't have the presence of a competition commission right at the grassroots. And therefore, sometimes laws like you cannot charge more than a certain amount may be necessary to protect the poor," he said.
Dr Rajan said an interest rate cap on loans given by MFIs may force some people to go to money lenders who are outside the formal system and can charge an arm and a leg, but at the same time it ensures protection of consumers.
He said: "So, we should have a reasonable ceiling...not too low but not so high that it is irrelevant. When we have more competition we can remove this ceiling.
"For now, despite the MFIs saying that the ceiling is harmful and I admit it does harm certain individuals who are forced into the hands of the money lender, it is something that we should continuously re-examine but we probably have to live with it at this point."
The Reserve Bank had in April 2012 capped the interest rate on MFI loans at 26 per cent following the Malegam committee report.
RBI set up the Malegam committee after the October 2010 MFI crisis in Andhra, when the state banned MFIs from coercively collecting instalments after some borrowers allegedly committed suicides fearing recovery agents.
This led to a massive default by borrowers in the undivided state from which the then largest MFI market is yet to recover.
The culture of loan waivers must end: Raghuram Rajan-Hindu Business Line
Mumbai, November 13:
Politicians must put an end to the culture of loan waivers, normally offered as a part of pre-poll sops, as it does more harm to the system than offer any help, said Reserve Bank of India Governor Raghuram Rajan.
Recently, politicians from the newly formed States of Telangana and Andhra Pradesh announced a loan-waiver scheme before assembly elections in these States.
“Clearly this is another form of transfer but again waiving loans does widespread damage. It does damage to the credit culture… it makes it hard to let the flow of credit to happen,” Rajan added.
He cited studies on how loan waivers disrupt credit flow and makes the recipients only better off in the short-run but worse off in the long term.
“I think the message that should be sent widely and clearly is to not do loan waivers,” Rajan said. He instead suggested other measures such as loan restructuring for people affected by calamities as possible alternatives to loan waivers.
He also cautioned that such waivers end up benefiting the wrong people instead of the intended recipients and added that such doles (in other forms) must be more targeted.
This was, in fact, borne out in the 2008 loan waiver announced by the UPA-I government. ₹71,000 crore was later found to have been massively misappropriated.
Interest subvention
The RBI Governor also added that interest subvention is another practise that needs to be checked.
Subvention is a scheme where the Government encourages lenders to give credit at cheaper rates than market rates to borrowers and then compensates the lenders.
“To my mind, broad-based interest subventions distort the price of credit and lead to misuse. They also lead to wrong kind of information.
“For example, if you incentivise short-term loans, you don’t get long-term investments,” he added.
He suggested using Direct Benefits Transfer instead of encouraging interest subventions.
“If you want to incentivise a particular activity of, say, small and marginal farmers, give them direct transfers and let them use it in whichever way they want.
“Do not force them to get into borrowing by offering them lucrative benefits,” Rajan added.
No comments:
Post a Comment