Articles by N A Mujumdar

The new banking culture nurtured by the economic reforms is alienating not only the small borrower but also the small saver.
THE reforms in the banking sector, introduced since mid-1991 initially as part of the macro-economic adjustment programme, have changed the profile of Indian banking, particularly of public sector banks. No longer, is it now possible to camouflage inefficiencies of banking under the garb of 'social banking'. Profitability has emerged as the single-most important criterion for judging the operational efficiency of individual banks. As the Reserve Bank of India (RBI) put it: "Improving the profitability of banks would have to be a major pre-occupation..." Recapitalisation of nationalised banks, introduction of a system of income recognition, asset classification and provisioning, a greater degree of autonomy to banks in the interest rate regime, reduction in the non-performing assets (NPAs), and in the Statulory Liquidity Ratio (SLR) all these have changed the face of public sector banks. RBI deserves to be congratulated for transforming the profile of Indian banking in such a short span and so painlessly.

Financial Reforms and Rural Development N A Mujumdar THE country is passing through an unprecedented economic crisis and since mid-1991 a series of measures, including the devaluation of the rupee in July 1991, were taken to face the crisis. Sweeping reforms like trade liberalisation, industrial decontrol and measures to attract foreign investment have been introduced. These are indeed far-reaching structural reforms which mark a complete departure from the basic approach to, and philosophy of, planning for development which we had adopted since 1951. These are not ad hoc measures but form part of the structural adjustment programme which is embodied in the Memorandum on Economic Policies submitted to the IMF in August

Agenda for Reform N A Mujumdar The financial system in India is at the end of its first phase of development characterised by active state intervention to build up the institutional infrastructure and is now poised to enter the second phase of deregulation and rationalisation and simplification of controls. However, to think in terms of total financial liberalisation at this stage would be premature, current fashions notwithstanding. Sketching the broad contours of the financial scenario likely to emerge in the 1990s, the author proposes an agenda for financial with a view to ensuring that the financial system plays its supportive role in sustaining economic growth.

The strategy of growth envisaged in the Sixth Plan and the emphasis placed on increasing the share of credit from the public sector financial system going to small farmers and small industrial enterprises necessarily set the tone for future development of banking. This note seeks to draw attention to some of the issues involved in moulding the development of banking in accordance with these two aspects of the Plan strategy, THERE are two aspects of the Sixth Plan which may be said to set the tone for future development of banking: these are the strategy of growth and the emphasis placed on increasing the share of credit from the public sector financial system of small fanners and small industrial enterprises. The priority accorded to sectors "which generate the maximum employment and which have a significant impact on the standard of living of the poorest, like agriculture and allied activities, village, cottage and small industries''1 necessarily implies a more dispersed pattern of growth. Secondly, the Sixth Plan makes repeated references to the need for correction of a major imbalance in the distribution of credit: "... the major beneficiaries especially of the banking system have been the wealthier part of the population both in the urban and rural areas, and the vast majority have barely been touched."3 As a correction of this feature, redeployment of credit in favour of small fanners, agricultural labourers, artisans and small producers is envisaged. These two aspects of the Plan have important implications for planning both the future structure of the banking system and the deployment of credit.

N A Mujumdar To the dismay of the purists, it has been difficult to provide a precise assessment of the dimensions of rural unemployment in India. But is precise measurement the sine qua non of formulating policy measures designed to begin solving the problem ?