File Photo for Representational Purpose only
Mr. Nara Chandra Babu Naidu, Hon. Chief Minister of the State of Residual Andhra Pradesh is reported to have written a letter to Finance Minister Arun Jaitley and RBI Governor Urjit Patel seeking the immediate release of Rs. 5,000 crore currency to meet the needs of the people in the state. Here is a link to the Hansindia.com news report: Click here to go to http://www.thehansindia.com/posts/index/Latest-News/2018-02-15/Chandrababu-seeks-immediate-release-of-Rs-5000-crore-cash-to-AP-/359184. Even after elapse of more than 15 months since the feat of Demonetization of Rs. 1,000 and Rs. 500 Currency notes by Hon. Prime Minister Shri Narendra Modi, Bank Branches in Residual Andhra Pradesh are showing glimpses of SHUTTERED DOWN ATMs owing to paucity of cash. "No Cash Boards" at ATMs in Andhra Pradesh has become a near daily future. Cash payments are rationed-down even to levels of 1/10th, even when Depositors visit Banks to draw Cash, because the Bank Branch has to distribute same amount currency notes to ten depositors. During Demonetization itself, Indians learnt a lesson that they have to maintain significant amounts of cash at home to make emergency payments. This is what is called in Traditional Micro Economics as "Liquidity Preference Theory". Though this Theory was intended to explain how "interest" arises as a payment for "cost of Funds" , to induce individuals to part their Money, the paltry interest rates paid by Banks to their Depositors have ceased to tempt Indians with Cash, howsoever little it may be, to keep their hard-earned monies in Banks. Actually, persons of lower incomes will have greater LIQUIDITY PREFERENCE to meet their Transaction Needs, because they cannot postpone transactions. More so, in respect of Employees and Workers who may get their salaries/wages credited through Bank Accounts under instructions from Government, because they have no choice.
| News item | ybrao-a-donkey's personal view not intended to be imposed on others |
| Mr. Nara Chandra Babu Naidu, Hon. Chief Minister of the State of Residual Andhra Pradesh is reported to have written a letter to Finance Minister Arun Jaitley and RBI Governor Urjit Patel seeking the immediate release of Rs. 5,000 crore currency to meet the needs of people in AP | If we consider how Hon. Prime Minister and Union Finance Minister have discarded many requests made by Shri Naidu from 2014 to Feb. 2018, I get an impression that Mr. Naidu's Requests may get counter-productive and negative results. In Telugu language, there is a proverb and a film song: AaDu vAri mATalaku arthAlE vEru lE avunanTE kAdani lE. kAdanTE avunani lE. (Approx. English: The words of Ladies have different (nearly opposite) meaning. When women say 'yes' it means 'no', and, when they say 'no' it will be 'yes'. Consequently, if Mr. Naidu writes for more Cash, not only Cash will not be sent, but also, he will be asked to provide Accounts for all the Cash sent from 2014. |
| Withdraw FRDI Bill or will launch nationwide protest: Mamata Banerjee How will we eat pakodas if our money is not safe in banks, says CM Mamata Banerjee. Link to read this news item: http://indianexpress.com/article/india/withdraw-frdi-bill-or-will-launch-nationwide-protest-mamata-banerjee-5062915/ | The problem of absence of security for Depositors' funds in the event of Insolvency-Liquidation of Banks existed even prior to introduction of FRDI Bill. That risk will not disappear, even if the FRDI Bill is withdrawn by the Government of India. Prior to introduction of FRDI Bill, Depositors were getting "Deposit Insurance" protection only upto Rs. 1,00,000/- for all their Deposits with all Scheduled Banks in India, both Public Sector and Private Sector Banks. Scheduled Banks were expected to pay premium to an Institution called DICGC (Deposit Insurance and Credit Guarantee Corporation) as a percentage on their Total Deposits. This payment of DICGC Premium Banks were doing with a low profile coolly from their own funds without recovering from Depositors, and Public have not been aware of their risks for Deposits exceeding Rs. 1,00,000/-. After Nationalisation of Banks in 1969, there were very few insolvencies-liquidation of Banks. If some Banks went into difficulties, RBI was rescuing them by providing required funds through a facility called "REPO". Banks borrowing from RBI to tide over their Liquidity needs,- was a routine operation undertaken by the Banking Operations Department of Banks' Central Offices-- which is done by pledging their SLR (Statutory Liquidity Reserve) Securities, and repaying the borrowings when their position improved. When very small Banks become too weak to function independently, techniques such as 'merging them with healthier and larger banks' are adopted. |
 Question: In case of Public Sector Banks, Mr. Arun Jaitley has assured that Government would come to the Rescue of PSBs, and would not allow them to be liquidated, endangering Depositors' Funds. |
Since 1969, this issue remains 'vague' in the sense that there is an implied Assurance that Government will come to the Rescue of Public Sector Banks. But this Implied Assurance is not statutory. It can become Statutory, if the Provision of "Government coming to Rescue of Public Sector Banks" is incorporated in RBI Act, SBI Act, Banking Regulation Act, Acts relating to Nationalisation of Banks, etc. etc. wherever needed. Assurance made by a Finance Minister or a Prime Minister on the Floor of Parliament seems to have only some Moral value. But, yet, the same Party Government, or succeeding some other Government can always go back from such promises, as has been proved by the denial of "Special Status" to the Residual Andhra Pradesh, which is only a promise made by 2014 February Prime Minister Hon. Manmohan Singh. About that Hon. 2018 Prime Minister Mr. Narendra Modi is silent, and 2018 Finance Minister is categorically negative. BJP has simply tried to throw the blame on Mr. Manmohan Singh and his Government for not including "Special Status" to Residual Andhra Pradesh in the AP Bifurcation Act 2014. |
| Question: Do you mean to say that Depositors are justified in withdrawing all their Funds from both Public Sector and Private Sector Banks, in the wake of FRDI Bill? | Ans: Depositors have their own apprehensions, whether rational or irrational. But one question arises: Will the depositors be more secure elsewhere?-- Shares? Mutual Funds? NBFCs? Real Estate? Gold? When risks are nearly same/similar, in Telugu language we have a proverb "E rAyi aitE nEmi tala pagula koTTukOTAniki?" (English: If our purpose is to break our heads, type of stone used for breaking head will be immaterial. Head can break in nearly same manner whether we use a granite stone or a marble stone). The Government should have introduced two different separate FRDI Bills in Parliament. First Bill- for Public Sector Banks. The second bill- for Private Sector Banks. The Public Sector FRDI Bill should clearly include Government's responsibility and Protection from Government. The Private Sector Banks FRDI Bill should be handed over to Experts at least for one year, for open discussion. In fact, it is high time separate Banking Regulation Acts are enacted for regulating Public Sector Banks and Private Sector Banks. Reason: Their Roles vary. |
| Question: When you say that there should be two different FRDI Bills separately for Public Sector Banks and Private Sector Banks, you seem to be biased against Private Sector Banks? | Ans: YA! I am biased against Private Sector Banks. Because Private Sector Banks failed miserably in protecting funds they collect from Public, Nationalisation of Banks had become necessary in 1969. Inter alia, there may be other reasons also, but the Chief Reason in my personal view is, Private Sector Banks failed abominably in operating-using Public Funds in a Secure Manner. It is a different thing that some Public Sector Banks too failed, for which now the Government of India is forced to infuse Funds as 'Additional Capital' to PSBs. It is not that 'medicine' has proved to be worse than 'disease'. Yet, there can be no alternative for Public Sector Banks. We can write at least 10,000 pages about Solutions for this Problem. And it will not be 'Uka dampuDu' (English: Pounding rice husk to make it fine). |
 "...Central government left us in the lurch but did not miss out on the politically prudent thing, which is to fork out substantial sums to poll-bound States. For instance, Karnataka got handsome allocations. ..." -- Communist Party of India Marxist, Andhra Pradesh State Secretary P. Madhu. |
Ans: Special Status, Special Packages, Kadapa Steel Plant, Duggarajapatnam Port, Visakhapatnam Railway Zone etc. etc. are all demands concerned with a bourgeoisie setting. Even if all of them are showered from the Sky, the problems of the Poor and Lower Middle Class, Working Class in Andhra Pradesh do not get solved. Not only that, they do not get at least partly ameliorated. It is a different thing that BJP and Congress have made false promises in 2014 February in Parliament, and enacted Andhra Pradesh Bifurcation Act in an unjust manner. The Problems of the Poor of Andhra Pradesh cannot be solved with hackneyed tools such as Regional Chauvinism, Linguistic Chauvinism, Religious Chauvinism, Casteist Chauvinism. CPI and CPIM for short term benefits to their Parties, ought not to have drifted towards such less effective choices, abandoning their basic task of Enlightening Workers and Masses about the benefits of and the need for True Total Socialism. |
This God forsaken place is in Kolladam Village, Satyavedu Mandal, Chittoor District of Residual Andhra Pradesh, India. This village seems to have become a part of an Industrial Park established by A.P. Industrial Infrastructure Corporation, Tirupati. I hope to visit this little place, if I live longer. In the meantime, I hope that the Youth of Kolladam will get more employment opportunities from the Indusrial Park which is replacing the lands of their village.
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