982 The words of our Rulers cannot / may not have to be taken literally. If anybody takes them literally, they may be cold-shouldered without being told that they are being sidelined, and of course, reasons will not be informed.

In my mother tongue- Telugu language spoken by 100 million people across the world, there is an adage "ADu vAri mATalakU arthAlu vErulE. avunanTE kAdanilE. kAdanTE avunanilE. Approx. Engl: The meanings for the words of Ladies will be different from their apparent tenor. If they say 'yes' it means 'no'. If they say 'no' it means yes. In this adage, there is no gender bias. The maxim arose from murmurs of love, and are not intended for serious consumption. This adage was also used very effectively as a song in the Telugu film of 1950s, 'missamma'. That song I shall give at the bottom with its approx. English meaning. The purpose of quoting the proverb, and the film song of 'missamma' is to extend the depth and purport of its meaning to Public Administration, and Politics. We can have a new adage "pAlakula mATalaku arthAlE vErulE. approx. Engl. The meanings of the words of the Rulers will be difference from their face value. Appearances can be deceptive.

Context:V.K.R.V. Rao Memorial Lecture at Bengaluru. Relevant links

Click here to go to http://economictimes.indiatimes.com/news/economy/policy/speak-your-mind-dont-just-endorse-official-lines-chief-economic-advisor-arvind-subramanian-to-experts/articleshow/58631014.cms. Subj: His perceived Experts' bluff for "falling over backwards" to justify an official decision, which denies the government high-quality inputs, saying they should be consistent in giving feedback towards policymaking.

What Mr. Arvind Subramanian, India's Chief Economic Adviser, is reported to have said:

What CEA said	yb-donkey
"...On the domestic side, there is a clear relationship between expert analysis and official decisions. Before policy decisions, the expert analysis is often illuminating. But once the decisions are taken, it is truly striking how the tune and tone of the analysis change. Analysts fall over backwards to rationalise the official decision ..."	Post demonetization, only two Economists are left in INdia. 1. Hon. Prime Minister. 2. Hon. Finance Minister. Others are virtually intruders, or 'unwelcome guests'.
"...Yet, instead of criticising the official decisions, as consistency would demand, analysts found ex-post logic to attribute merit to these decisions. That is, far from criticising the central bank for holding rates constant over the past three announcements, analysts praised the policy stance as prudent and helpful in boosting the credibility of the inflation-targeting framework ..."	Our CEA seems to have clearly understood the expectations of our Hon. PM & FM., who want the Experts to criticize RBI. The CEA is trying to 'drill' that message into the minds of the 'Experts', who have already apparently understood the message, and are trying to re-sculpture and re-tune themselves.
"... My claim is that experts often hold back their objective assessment. Instead, they censor themselves, and in public fora are insufficiently critical and independent of officialdom, whether the officials are in Mumbai or Delhi. To the extent they offer criticism, it is watered down to the point of being unidentifiable as criticism ..."	Survival Method. Rex Non Potest Peccare. The king can do no wrong.
"...If you ask them, they would say they are just trying to be 'constructive'. But I feel something else is at work. For a variety of reasons, experts feel the need to stay on the right side of power -- whether the RBI or the government..."	Else, they may be blacklisted. They may be branded as Progress-Blockers.
"...before policy decisions are made, observers tend to express their views that they think officials are likely to take on board. After policy actions, they try hard to endorse the decisions already taken. ..."	Experts may try to predict what the Industrialists/Corporates want, as the policy from Govt., as our PM & FM assure and promise to the Industrialists/Corporates everything they want on a golden platter. But sometimes, their hands may be tied from extraneous factors such as welfare of people, in the context of elections, or court decisions.
"...As a result, we in the government do not really benefit from their wisdom. This is a serious problem, because high-quality policy-making demands high quality inputs and high quality debates..."	Policy is not made by Expert Opinions. Policy is made in the mind of PM alone, and sometimes, in the dual minds of PM & FM.
"...The paradox is that in other spheres -- such as trade policy or development policy -- one sees a more vibrant, healthy, and unself-censored debate. Why is there such little debate about macro policy? I would venture three explanations..."	Even in other spheres re-sculpting and re-tuning is taking place. Rex Non Potest Peccare. King can do no wrong.
"...Bankers are careful not to get on the wrong side of the government or the RBI, because they worry about losing access and because they are regulated by them.	Survival Need.
"...It is difficult to get a man to understand something when his salary depends upon his not understanding it. ..." (Quoting writer Upton Sinclair).	Who has to change? Rulers? or the Paid-Experts? CEA knows.
"...Bottomline from this analysis is inflation pressures are easing considerably, the inflation target has been over-achieved, the inflation outlook is benign because of a number of economic developments. Real activity remains weak and well below potential, the exchange rate is appreciating, denting exports. ..."	"Inflation is under control" is a perception of the Rulers. Because, they do not go to streets to buy NECESSITIES. How Rulers get their needs? Somebody from sky may be SHOWERING THEIR CONSUMPTION OBJECTS on them.
"Against this background, most reasonable economists would say the economy needs all the macroeconomic policy support it can get: instead, both fiscal policy and monetary policy remain tight. And on top of that, there are some officials who even think that policy should get tighter,"	Commonman does not know all these intricacies. He-she knows only to suffer.
"Today, there are hundreds of economists outside the government and the RBI and several within. Instead of getting a hundred plus views, we get about ONE view, the official view. Even more interesting is that about 12 months ago, when inflation was much higher and growth was higher, there were economists who called for a large cut in interest rates. Yet today, they are silent,"	Sine cure jobs? May be. But, Rulers can design drills which are similar to military drills, police drills, to make them march in a more syncronized manner.
"So, in the short run, it will want to shape opinion in its favour. But in the long run, that is perhaps not desirable. Public interest is perhaps better served by richer debate that encompasses critical views, including of officialdom. Officials should signal that clearly,"	Is CEA telling to himself? Anyway, he cannot air these views before PM-FM duo.

ybdonkey's views are his personal views, not intended to spoil the minds of others

In Democracy, both at National level, and at Provincial levels, Cabinets are expected to discuss issues threadbare before decisions are taken, where dissenting views are welcomed and their pros-and-cons considered, irrespective of whether they are finally accepted by the Cabinets or not. Anyway, that custom died down in India.

A similar custom is expected in respect of 'Advisers' of all kinds. But it does not appear to germinate, because at Cabinet level itself, the custom of consultation has become defunct and extinct.

Can we expect Mr. Arvind Subramanian to reveal whether he was consulted about the pros-and-cons of demonetization, before the PM took the decision of 'demonetization', and if so what did he advise the PMO? This, he may not be able to reveal, because he might have been bound by some oath of secrecy.

In some respects, the role of Attorney General in the sphere of law, and the role of Chief Economic Adviser in the sphere of Economic Policy, are strikingly similar. Now, can Mr. Arvind Subramanian do some introspection? May be, he may be doing it silently. Or he may not be doing. Survival instinct.

To come back and continue adding / deleting / modifying. सशेष. ఇంకా ఉంది.

867 Pressurising Indian Public Sector Banks to reduce their lending rates does not appear to be proper

News: From 1-2-2017, State Bank of India, India's largest Bk., cut its marginal cost of funds-based lending rate (MCLR) across all tenors by 90 basis points (bps)., the steepest cut in several years. The six-month MCLR is now 7.95% and the three-year rate stands at 8.15%. PNB has cut its one-year MCLR rate by 0.7% to 8.45% from 9.15%. Union Bank of India has reduced its MCLR by 0.65-0.9% to 8.65%. The revised one-year MCLR stands at 8.65%. Link: Click here to go to Livemint.com, to study this Report. Indian Public Sector Banks seem to be under substantial pressure from Reserve Bank of India, Government of India-Ministry of Finance, to reduce their lending rates. Chair persons of Indian Public Sector Banks, though are supposed to be experts in Banking and Finance, though are supposed to act autonomously in consultation with their Boards, cannot really say anything, because their positions are precarious and at the mercy of our Rulers of India 2014-2019. Besides the Chairpersons have their own shortcomings and weaknesses, which place them in 'glass-houses' and the adage 'people in glass-houses cannot throw stones' comes to their mind. Persons can act with steadfastness and uprightness only when they are strong ethically and emotionally. Besides, most chairpersons of Public Sector Banks will be approaching their retirement age, and they may develop a thinking 'Anyway, we are going away. Why should we become unpopular with our bosses and the industrialists?'. Apart from that, their minds may be engaged on 'how to search for greener pastures. 'Which industrialist is going to appoint me in some sinecure job?' thus reverberates their inner-self.

SOME RELEVANT TELUGU PROVERBS/MAXIMS

1. tummitE UDe mukku. (A nose which gets severed and drops down, when a person sneezes. It will not last long anyway, because someday or other a person has to sneeze).

2.evariki puTTina biDDa, vekki vekki EDva. (When their own child dies, people sob and wail ceaselessly. When an orphan child dies nobody will weep. Purport: Nobody will show much concern, when the problem is not their personal.)

tinu, tina nivvu. (Eat and let others to eat. Purport: Live, and let live. This is a worldly wise advice. 21st Century additional meaning: Be corrupt, and allow others to become corrupt.

Additional inputs from ybrao-a-donkey, which are not intended to be imposed on Readers

1. Indian Public Sector Banks operate on a very slender spread (Difference between lending rate, and deposit interest rate = spread, that is their profit margin). This spread must remain consistent and stable, if Banks are to stay in existence, without becoming bankrupt.

2. Considering the very very low spread which the PSBs in India operate on, they will be constrained to reduce their deposit interest rates paid to public on Savings and Term Deposits, in proportion to the cuts they make in their lending rates. In India, public sector bank depositors are an unorganised lot. They do not and cannot form pressure groups, to press the Govt. and Banks to keep the deposit interest rates stable.

3. Deposit interest rates should not only compensate the Bank Depositors who lose the real value of their money owing to inflation, but also provide a reasonable return on their deposits. Aged persons live on income earned from their deposits with Public Sector Banks. Besides, they are forced to pay Income Tax on this meagre interest income on deposits, if the interest exceeds Rs. 10,000 p.a. That Rs. 10,000 was fixed at a time, when Rice was some Rs. 15 per kilo, but now the rice is Rs. 50 per kilogram.

4. The steep increase in deposits of Public Sector Banks after July 2016, is not owing to attractiveness or competitiveness of Public Sector Banks in the Market. It is by legal coercion. People had no alternative. Not only that. Post demonetization, people have lost their trust in the PROMISSORY NOTE GIVEN BY RBI, with RBI Governor's signature, "I promise to pay the bearer a sum of Rs. ...". Earlier, as far as currency note was concerned, Government was their Supreme God, and sometimes more than the Supreme God. Now, that confidence is shaken.

LIQUIDITY PREFERENCE THEORY OF INTEREST

5. Liquidity Preference Theory of Interest of the Economics Text Books, is operating now in full vigor. In spite of loss of confidence on the currency note, people are still queueing before bank counters and ATMs because, people want to take back their money from the Banks, and keep it at their homes, to meet transactions both foreseen and unforeseen. Apart from that, during the period 8th Nov. 2016 to 31st Dec. 2016, they have postponed some of their expenses, repayment obligations, which required liquid cash. Now, they have to meet all such commitments.

The liquidity preference of depositors was low earlier, when they had confidence in Banks and ATMs, the confidence of the type "Why should I draw cash and keep in home, exposing myself to thieves and robbers? Even at the last moment or one day prior to the event (e.g. marriage, funeral, house repair etc.) we can draw the amount." Now, that confidence has been replaced by an eagerness and wisdom to keep money at hand.

Small and Tiny businesses will keep all their currency notes at the homes of proprietors' and partners', and everyday they will carry cash to their shops. Reason: Once bitten twice shy.

Ques: There is some ambiguity in what you write. You are contradicting yourself. You say people have lost their confidence in currency notes. You also say that people will hold all their currency in homes.

Ans: No conflict or contradiction. You can visualise two situations:

TRANSACTIONAL DEMAND

Till substitutes develop as PAYMENT TOOLS (not necessarily digital, as per Rulers of India 2016's wishes), e.g. minuscule sized gold coins and silver coins (without Government emblems), without Rupees denomination printed on their face, their value determined on the basis of their weight mentioned on them, currency notes will have to be used for daily transactional demands.

GOVERNMENT CANNOT SEARCH EVERY HOME EVERY DAY

Once people decide what part of their money should be kept in 'cash-currency' to meet daily and short term transactional demand, they will keep that separately.

For the remaining surplus, they will not hold currency. Depending on the type of business/occupation/family conditions, the ratio between Cash & non-cash may be in the ratio of 20:80. People may part with the currency, in exchange for something which is slightly liquid, but which is more inflation-proof, and Government-proof. People may prefer to buy more gold and silver coin equivalent metal pieces as STORAGE OF VALUE, which Govts. cannot take away, by making speeches on TVs. In spite of numerous controls which Government may impose on Gold Dealers, parallel unorganized markets will develop. Richer people may purchase more Fire & Barglary Resistent safes (FBR Safes) and install small lockers at their own homes.

GAME OF DONGA - POLICE

External appearances of houses may become 'poor' and 'simple' so as not to attract to draw the attention of Income Tax Search Teams, roaming with metal detectors and scanners. There will be a technological race between the Government and the People, a game of 'donga-police' (Thief and Police in English). Who will play the thief? Who will play the police? Who will be onlookers? This will be the subject of our forthcoming blog posts.

To continue. सशेष. ఇంకా ఉంది.

857 Fiscal and Monetary Policies cannot/need not be regarded as beyond the purview of Supreme Court of India

With due high respect to the Supreme Court of India, yb-donkey is emotionally compelled/tempted to say that fiscal / monetary policies a Government follows cannot / need not be beyond the purview of the Supreme Court. Context: Suprme Court's reluctance to look into Demonetization 2016 (popularly known as NOTE BAN), on the ground of such policies being within the exclusive domain of the Executive. Here is a DeccanChronicle.com news report dated 17th Dec. 2016, titled: Supreme Court not to tinker with notes ban Click to go to Deccan Chronicle article..

For the benefit of those, who are not conversant and familiar with the terms "fiscal" and "monetary", here are the general broader meanings of the terms.

FISCAL POLICY: Deals with A Government's income and Expenditure. Example: budget, tax revenues, internal borrowings, external borrowings, plan expenditure, non-plan-expenditure, deficit financing etc. Primarily, a domain of Ministry of Finance.

MONETARY POLICY: Deals with Money Supply in the Economy. Internal Currency Management. Pricing of moneys (interest rates). etc. Primarily, a domain of Reserve Bank of India, though technically RBI itself is an instrument of the Government.

TOP TEN REASONS. WHY SUPREME COURT NEED NOT HESITATE TO SHY AWAY FROM INTERVENING AND ADJUDICATING THE DEMONETIZATION 2016 (NOTE BAN).

IF NOT GOVT. LAW, CAUSE OF EQUITY SEEKS JUDICIAL INTERVENTION

Ordinarily, Supreme Court need not look into Fiscal Policies of the Government, or the Monetary Policies of the Reserve Bank of India (indirectly by GoI). But from 8th Nov. 2016, a sort of FINANCIAL EMERGENCY arose in India. Citizens of India, initially thought that it would last a few days, and the train would be back on track. But, the derailment continues even after 40 days, deep through Dec. 2016. In his Nov. 8, 2016 speech, Mr. Narendra Modi, the Prime Minister of India while declaring that the Rs. 500 and Rs. 1000 notes will become trash, has not said that currency shortages are going to continue for 50 days, though time is given to holders of notes to deposit their trash with Banks upto 31st Dec. 2016. He is now giving assurances that everything will be normal after 50 days. But, many experts seem to have a different opinion.

BREACH OF NATURAL JUSTICE

Natural Justice , and EQUITY are indisputably paramount and superior, when compared to Parliamentary Laws, Delegated Laws (Notifications issued by Executive, using a sort of delegated general authority provided in Parliamentary Laws, to take care of contingencies and exigencies, as everything cannot be exhaustively inducted and packaged into a Statutory Law at the time of Enactment), and even Case Laws (Supreme Court judgements accepted by lower courts as role-models). On 8th Nov. 2016, with the WAVE of a Prime Minister's hand, 86% of the currency held by the people to purchase their necessities, and to undertake their daily small businesses, has been reduced into a heap of trash, leaving people astounded, making them beggars in their own country. Foreign Tourists have been rendered into stranger beggars in an unknown-land, with old trash pieces in their hands, wondering about how to buy a meal for the day, and surviving on help from good samaritans.

HIGHEST COURT MAY HAVE TO INTERVENE WHERE EXECUTIVE BECOMES PARANOID AND FICKLE

Though it may be apt for Governments / Executive to make on-course changes in guidelines depending upon contingencies, facts show that Government and its Executives have been announcing changes everyday just as film heroines change dresses several times in a song. Sometimes, these changes seem too fickle. I shall give my own practical experience.

PERSONAL EXPERIENCE

Even before Nov. 8 demontization, very few ATMs were giving Rs. 100 denomination notes. I used to search for ATMs with Rs. 100 notes. There also, the machines are set to give Rs. 100x5= Rs.500, and the remaining balance in Rs. 500/1000 denomination. To overcome this problem, if I needed Rs. 5000/- I used to draw Rs. 1,000 five times, to get Rs.2,500 in 500 denomination, and Rs. 2,500 in Rs. 100 denomination. Thus, I accumulated Rs.12,000 in 500/1000 denomination notes as on Nov. 8. I happen to be an addict and slave of PROCRASTINATION. As the Govt. gave time for deposit of old notes into bank accounts upto 31ST Dec., I went on postponing the deposit, while I was seeing others deposit their old notes.

ANALOGY OF ZEBRA CALVES

One night, I had a bad dream, may be as a sequel of Government's daily announcement of changes in guidelines. In the dream, Govt. was forbiding deposit of old notes into one's own accounts. Next day, I rushed to bank, and disposed off the Rs. 12,000/- like a vratam (sacred duty), with help of fellow-queue-gens who were more knowledgeable about ATM Deposit machines. Had I not performed that vratam then and there----, today, I may be facing an awkward situation: 1) Deposit Rs. 5,000, Rs. 5,000 and Rs. 2,000 in three lots. 2) Or go to Bank Manager, provide explanation in the presence of two officials "why I had not deposited earlier", pray them and deposit Rs. 12,000/- in one lot. What is the lesson of this predicament? The story of Zebra and its calf. I read somewhere. Cows lick and kiss their calves, soon after their births. Zebras, instead, kick their calves, and make them to run for safety. This was said to be to teach the zebra calf to be on alert right from the first day of birth. In the same manner, citizens are being taught to be on alert, to save themselves from their Nation, and its Nationalist Patriotic Rulers.

STORY OF SEVEN PRINCES, AND SEVEN FISH

In Telugu language, there is a fable told to children, called STORY OF SEVEN FISH.

There used to be a king. He had seven sons. The seven sons went, hunted, and brought seven fish. They dried them. One fish did not dry. The owner-prince of that particular fish, went to it and questioned: "Oh fish! Oh fish! Why did not you get dry?"

Fish: "A haystack obstructed my access from sunlight."

Prince: (The Prince went to the haystack, and asked it): "Oh haystack! Oh haystack! Why did you obstruct sunlight to the fish?"

Haystack:- "Cow did not graze me".

(Now the Prince went to the cow and asked it). "Oh cow! Oh cow! Why didn't you graze the hay?"

Cow: "The cowherd didn't take me to grazing".

(Now, the Prince went to the cowherd and asked him): "Ow Cowherd! Oh Cowherd! Why didn't you make the cow to graze?"

Cowherd: "Mother did not feed me my breakfast! "

(Now, the Prince went to Mother and asked her): "Oh Mother ! Oh Mother ! Why didn't you provide breakfast to the cowherd?"

Mother: "The child wept. Hence I could not attend to the cowherd's needs."

(Now, the Prince went to the child and asked it): "Oh child! Oh child! Why did you weep?"

Child: "Ant bit me".

(Now, the Prince went to the ant, and asked it): "Oh ant ! Oh ant! Why did you bite the child?"

Ant: "If the child keeps its finger, in my golden ant-hole, won't I bite him? What should I do, if not biting it? "

The Bank Officials question the late depositor: "Why didn't you deposit old notes earlier?"

Late depositor: "Long queues obstructed me going into the ATM room. Police guards and long queues at Bank gates, obstructed me from entering Banking Halls."

Now the Bank Officials have to go to long queues and ask the queue-gens: "Why did you obstruct the late depositor from going in /coming in?". But with their workload, the Bank Staff are getting heart attacks. They are unable to perform their daily or alternate day sexual intercourse with their wives, as Bank-staff are spending 24/7 in Banks, and are getting too fatigued to perform sex.

SUPREME COURT HAS ALREADY INTERVENED NUMEROUS TIMES INTO NUMEROUS FLIMSY THINGS WHICH HAVE NO NATIONAL IMPORTANCE

Anybody can prepare a Table of Contents for the pending/settled Supreme Court cases. The table will reveal, all types of cases both important, and unimportant have been entertained by Supreme Court. I am afraid, that it will not be reasonable to say those sets of Supreme Court Judges, and the present set of Supreme Court Judges are different. Can't citizens expect some continuity? Strictness or liberality, whatever they are, can't we citizens expect some consistency? The same is the case with locus standi in respect of public interest litigations (PIL). It is difficult for citizens or even legal experts to forecast whether a particular PIL will get admitted or disposed off as flimsy/lacking locus standing with the applicant getting fined Rs. 10,000/-.

When compared to many other cases decided by Supreme Court, examining the reasonableness of some notifications under demonetization and note ban, is not going to be intrusion and overstepping into Executive Arena.

To continue. सशेष. ఇంకా ఉంది.

568 No need to reduce Home loan interest rates गृह ऋणों के ब्याज रेट को कम करने के जरूरत नहीं है। గృహ ఋణాలపై వడ్డీ రేట్లను తగ్గించ వలసిన అవసరం లేదు.

Ms. Arundhati Bhattacharya, Chairperson, SBI, has rightly identified her six top priorities. There is no need to deviate from them, because India Inc. is pressing to cut lending rates. There is also no need to reduce interest rates on home loans, introducing such methods as teaser rates. Indian Public Sector Banks, having financed Home Loans at prices far higher than the intrinsic value of the underlying structures, now face a similar situation which American Banks and Investment Houses faced in 2008, when Sub-Prime Mortgage Loans became a problem in that country. As pointed out by Mr. Raghuram Rajan, RBI Governor, there is a need to cut the prices of Houses. According to news reports though in some cities like Mumbai and Delhi, Realtors have reduced prices, they have also reduced the size of the houses, and even the minimum fixtures. All the housesites in our Cities have gone into the hands of speculators, and builders are forced to purchase sites at very high prices and build flats thereon. Besides, there is the element of payment of bribes, for various purposes right from the conception stage to actual delivery to buyers. Consequently, home prices have gone beyond the paying capacities of even higher income group employees, not to speak of lower middle class, which has stopped thinking about owing a lifetime home. Till such a time, the Central and State Governments take truly effective steps to control house site prices and flat prices, it will be better if Banks exercise restraints in financing Home Loans.


Mrs. Nazma Heptullah is reported to have said as under. श्रीमति नज्मा हॆप्तुल्ला, मीडिया रिपोर्टों के अनुसार, यह कह दी। మీడియా రిపోర్టులననుసరించి, మైనారిటీ వ్యవహారాల కేంద్ర మంత్రిణి శ్రీమతి నజ్మా హెప్తుల్లా గారు ఇలా అన్నారు:-

People of all faiths are totally safe under Narendra Modi Administration.

श्री नरेंद्र मोदी के परिपालन में सभी धर्मों के जनता, संपूर्ण रीती में भद्र स्थित है।

శ్రీ నరేంద్ర మోడీ గారి పరిపాలనలో, అన్ని మతాల వారూ, సంపూర్ణ మైన భద్రతతో ఉన్నారు.

Let us allow it to go. At least, Ms. Nazma Heptulla, and her Minister-post are safe. हम इस बात को छोड देंगे। कम से कम, श्रीमति हॆप्तुल्लाजी, और उसकी मंत्री पद, भद्र है न। పోనిద్దాము. కనీసం హెప్తుల్లా గారైనా, భద్రంగా ఉన్నారు కదా. ఆమె పదవైనా భద్రంగా ఉన్నది కదా.

(To continue. और लिखने का है। ఇంకా వ్రాయాల్సింది ఉంది.

567 Indian Public Sector Bks should not be asked to cut lending rates. भारतीय प्रभुत्व बैंकों को ब्याज रेट्स कम करने के लिये दबाना नहीं चाहिए। భారతీయ ప్రభుత్వ రంగ బ్యాంకులను వడ్డీ రేట్లను తగ్గించమని వత్తిడి చేయటం ప్రమాదకరం.

RBI Governor, Mr. Raghuram Rajan, seems to be a courageous person, when news reports indicate that he is resisting constant continuous nudging + prodding by the Finance Minister & the India Inc. to cut lending rates. Simultaneously, we see him his nudging the Bank chairpersons to cut Bank lending rates, probably to show that he is pressing the Banks, but Banks are not heeding to RBI and the Govt. One gets an impression that he does not want to keep the blame for himself.

As a Finance expert, he may also be aware the present turmoil and tumult which the Indian Banks, particularly the Indian Public Sector Banks are going through. He may also be aware, that Indian Public Sector Banks operate with a very narrow spread between the interest rates paid on deposits and the interest rates charged on their lendings. He may also be conscious of the great difference between the roles expected to be played by Public Sector Banks and the Private Sector Banks. It is true that an RBI Governor is not expected to be a pugilistic punching bag for the Govt. and the Finance Minister. Nor is he expected to be an extremely empathetic agony aunt for the chair persons of Public Sector Banks. It is unfortunate that Finance Minister and Finance Ministry are not paying enough attention to the health of Public Sector Banks, which if they burst can cause irreparable damage to Indian Financial System. Providing funds to sick banks, is just one measure. There are numerous other things which deserve immediate attention from the Government, particularly the Credit Recovery Arrangements.

As the communications between the RBI Governor and the Finance Minister at top level are confidential, it is very difficult to gauge whether RBI is adequately representing the problems faced by PSBs to the Govt. of India. At least there is one reason to believe that he is conveying the pathetic problems of the Indian PSBs, as can be deduced from the willingness of Govt. of India to provide additional Capital to Public Sector Banks. This alone may not be adequate to say that everything is being represented upwards. Besides, the Government of India, may be either through RBI, or even directly under pressure from Institutions such as IMF, World Bank, Bank of England or Federal Reserve Bank (America's Central Bank), BIS (Bank for International Settlements) to increase the Capital(s) of Indian Public Sector Banks quoting some BASLE Convention or something else. Govt. of India seems to wilt relatively easily to international pressures, when compared to its understanding the domestic needs.

Some quotes dated 20th Aug 2015, at SBI Economics and Banking Conference, which are attributed to Mr. Raghuram Rajan, RBI Chief:

"...There is a need for banks to cut their lending rates anticipating the benefits which will be accruing from the central bank's rate cuts. ..."

"...I think there is something to be said for the fact of the slow pace of transmission, that some front loading by the banks themselves may be useful. ..."

Some other valuable quotes related to this subject attributed to the Banks:

"...A 75 bps cut translates into 40-45 bps cut in cost of funds for banks. You've already seen a 30 bps cut. Transmission will never be a one-is-to-one correlation with monetary policy rates. ...--Ms. Chanda Kochhar"

ybrao-a-donkey's humble views. I shall not insist that you agree with me. वैबीराव एक गधे के विनम्र वचन. आप मुझ से सहमत होने के निर्बंध नहीं है। వైబీరావు గాడిద వినమ్ర అభిప్రాయాలు. నాతో ఏకీభవించమని మిమ్ములను వత్తిడి చేయను
1. Interest Rates prevailing in Indian Financial Markets where individuals, firms and Corporates lend to one another have mostly remained over 24% and rise even upto 120% p.a. depending upon security perceptions, need of the borrower, repayment program, etc. etc. Considering this hard reality, even a lending rate of 18% p.a. should not be considered as high. It is strange that India Inc. makes a hue and cry when Banks charge rates as low as 12% p.a. and demand large reductions in rates. It is really detestable that they ask for cuts in lending rates.

2. Indian Banks both Private Sector and PUblic Sector, have very poor credit appraisal, delivery, supervision, and recovery mechanisms. It is common for Corporates both industrial and non-industrial to divert borrowed funds for purposes other than the intended purposes. For this reason only we see hoarding of essential commodities, speculation in real estate, gold, silver, stock market speculations, cricket betting, with funds diverted from Bank borrowings. Once, the amounts leave the Corporates to their affiliates and subsidiaries or to the family members of the promoters, there is very little which Banks can do, to bring them back into the main stream of Finance. What the Corporates, both Indian and the MNCs operating in India, seem to want, apparently are cheap funds for short, medium and long term speculation. Else, except for those goods and products which have long production cycle, or stagnating markets, there should be no need to carry huge stocks, and pay interest to Banks. Corporates will not tell, but the interest amounts they pay, are for the moneys they block themselves in their hidden real estate or speculative investments, or in inter-corporate ventures. The best example we can get for this type of behaviors we can see from King Fisher, or the defunct Satyam Computers. In case of Satyam Computers, fortunately Mahindra came to the rescue of the Govt. and bought the I.T. dud. In case of King Fisher nobody knows what is happening and what is going to happen. I am also unable to recollect what happened to the dues of Indian Banks recoverable in case of Dabhol Power Project, Maharashtra.

I feel that it is high time for RBI Governor and the Finance Minister to ENABLE the Public Sector Banks to recover all their dues from the large Commercial and INdustrial borrowers. Court processes are cumbersome and time-consuming. Recalcitrant borrowers will use the time gap of nearly five years taken in courts for issuing decrees, to use the funds for their own purposes, though there is a procedure for attachment before judgements, it seldom works. Besides, attachments before judgements are intended as a sort of emergency method rather than as a recovery or loss minimisation proceedings.

Efforts made by banks with police help to forcibly take possession of secured assets where borrowers were non-coperative, were shunned by the court indicating that Banks cannot take law into their own possession. Even courts are unable to execute their own decrees, because they do not have staff or police of their own, and they depend on advocates appointed as Receivers/Assignees who ask Bank Staff to arrange transport and food for them. It is hightime for the Central Government and the respective State Government to constitute to post additional special Armed staff with crime and law & order powers, at, at least, Sub-Division Headquarters to help Banks in taking possession of securities, and their sale. Besides, RBI can ask Public Sector Banks, to set up a common Armed Security Force for enforcement and sale of security assets, by pooling funds and make Armed teams available to needy Banks when they need such services, and the Maintainer of the Security Force levy charges for providing the Security Enforcement and Recovery Armed Guard Services. Perhaps, it may be necessary to make some amendments to the Indian Penal Code, Civil Procedure Code, Criminal Procedure Code, Evidence Act, to make these things really work. Debt Recovery Tribunals alone cannot serve this monumental and monstrous task.
It is imperative that RBI treats and should treat Public Sector Banks differentially and preferentially from Private Sector Banks. This is simply because Private Banks and Public Sector Banks have different goals, different approaches, and different problems.

RBI should encourage Banks to mobilise their own lendable funds more and more from public and not depend on RBI's REPOS, by paying attractive interest rates to customers. Repos are intended to be emergency help, and not as primary lendable source of funds for Banks. Govt. or RBI or Banks or Industrialists should not have that impression that Banks will borrow from RBI at Repo Rates and add a measly margin for thier services.

If, under pressure from industrialists -> Govt. -> RBI, in case Banks reduce their lending rates and automatically, obviously, deposit interest rates, public will go elsewhere i.e. to unorganised sector or money-laundering institutions. Or they will buy gold or indulge in speculation. Not reducing interest rates on Bank deposits is particularly important, considering that Govt. is levying income tax on meagre interest which Banks pay on Bank deposits and insisting on TDS on Bank Deposits which are already low-yield investments owing to Deposit interest rates not matching with inflation.

(To continue. और लिखने का है। ఇంకా వ్రాయాల్సింది ఉంది.

437 Did Mr. Raghuram Rajan surrender on his own, or was he made to kneel? क्या रघुराम राजन अपने स्वेछ्छा से आत्म समर्पण किया? ౪౩౭ రఘురాం రాజన్ గారు స్వఛ్ఛందంగానే లొంగి పోయారా?

Mr. Raghuram Rajan is the 2015 Governor of the Reserve Bank of India.  Mr. Duvvuri Subba Rao was the previous Governor.   The previous Governor was very particular about RBI's role in controlling inflation, and kept close to himself the task of the monetary policy.  The previous Congress Government wanted RBI to cut the Repo Rates (Rates at which RBI lends to Banks), and thereby force Banks to reduce their rates of lending to industrialists and large businesses.  But , with due credit to Mr. Subba Rao, we must concede that he resisted the pressures of the Congress Government to cut down lending rates.


After the annointment of Mr. Narendra Modi as Prime Minister, and Mr. Arun Jaitley as Finance Minister, the Governmental pressure on RBI , to cut down lending rates seems to have multiplied.  The new RBI Governor apparently has  held on his own for some time.


Seeing the fate of many State Governors, bureaucrats, DRDO Head, Censor Board Members, he seems to have mellowed down.  The result seems to be: RBI has entered into a Monetary Policy Agreement with the Government of India.

RBI has already reduced the Repo rates twice; each time 0.25 percentage points.  Now, it is time for arm-twisting the Banks to reduce their lending rates.

Of course, they will follow suit.

ybrao-a-donkey's humble views वैबीराव गधे के विनम्र राय వైబీరావు గాడిద వినయపూర్వక అభిప్రాయం


1. The percentage of interest cost, in the total cost of production of businesses, Govt., RBI, Banks do not seem to bother about.  Corporates pay millions of bucks to cricketers, film stars to promote the sale of their goods.  They spend huge amounts on T.V. advertising.  The business lords fly on chartered or owned private aircraft.  Corporates pay their club and entertainment bills.  They maintain luxurious guest houses in Metros.  BMW, Benj, Audi, etc. great cars costing millions.  Their toilets may be covered with gold plates.  Entire bodies of their wives (dharma patnis), and concubines (adharma patnis) may be covered with diamonds.  Can't they bear 0.25 percentage points of interest?


2. What percentage of bank funds, the big business persons and industrialists, they use for real manufacture?  What percentage they divert to speculative activities like IPL Cricket, real estate speculation, stock exchange speculation, commodity speculation.  Banks do not have the required staff resources, skills, time, inclination, to check the end use of funds.  If the business persons and industrialists stop their inter-corporate gambling and speculation, need for Bank funds will go down, and interest rates will not become a problem.


(To continue.  सशेष.  ఇంకా ఉంది.)