ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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How Much of RBI’s Profit Transfer Is Enough

The Jalan Committee’s recommendations for the Reserve Bank of India to pay dividend to the government out of its current year’s surplus only after meeting the contingency risk buffer is a smart move towards the proverbial act of fine-balancing.This should put all speculations to rest about further transfers out of the central bank’s past reserves.

Much Ado About Nothing

The announcements for the financial sector in the 2019–20 budget are either too little or too grandiose relative to the actual requirements of the sector. Given this, the author questions the razzmatazz about the budget as the “auspicious” occasion for which government policy initiatives need to wait to be announced.

Monetary Policy Transmission in Financial Markets

In the Indian context, a key question is addressed: What has been the influence of monetary policy on different segments of the financial markets? Constructing a structural vector autoregressive model with the monetary policy rate, the pattern of monetary transmission to financial markets is examined over three distinct periods of regime changes in the Indian monetary policy and liquidity management framework. The empirical evidence indicates that there is sufficient period-specific transmission of monetary policy across the different segments of the financial markets. While the transmission of monetary policy to the money and bond markets is found to be fast and efficient, the impact of the policy rates on the forex and stock markets is limited.

Recent Downfall of the Indian Rupee

Assessing the trends in India’s balance of payments, it is argued that a combination of substantial trade deficit and a significant current account deficit financed predominantly by fickle portfolio investments could have made the rupee vulnerable to the moods of the global capital market. India’s huge dependence on oil imports along with high gold and electronic imports could also have played their roles in making the exchange rate volatile.

The LIC–IDBI Deal

In the context of the recent deal between the Life Insurance Corporation of India and Industrial Development Bank of India, is this proposed investment prudent from its impact onLIC’s balance sheet and income prospects as well as from an average premium payers’ standpoint? A possible alternative in whichIDBI’s retail assets could have been sold to a commercial bank and the remaining project finance portfolio turned into a wholesale and long-term finance bank is discussed.

Rise and Fall of Industrial Finance in India

Examining the sources of finance for Indian industry, this paper traces the transition from a state-owned and state-dictated financial sector to a regime of financial liberalisation. There are still a number of rough edges to this transition. With the initiation of financial sector reforms and the demise of development banking, there are indications that the industrial sector faces a credit crunch. While newer sources of finance could have compensated for the paucity of bank financing, the exit of development banks before establishing a successful corporate debt market has turned out to be costly for long-term financing. In this context, the experience of the Brazilian Development Bank could serve as a useful model for India.

Financial Sector, Monetary Policy and Budget 2014

The announcements in the union budget relating to the financial sector were incremental in nature and can be seen as a continuation of the policies of the United Progressive Alliance government. A critique.

The Global Crisis and Systemic Risks: Matching Sources with Correctives

Using the literature of pollution control and extending the idea of a Tobin tax, this essay argues that as far as unwanted excessive leverage by financial institutions is concerned, a leverage tax could be thought of. As far as complex financial products are concerned, the solution perhaps lies in transparency and a process of simplification of the products. In handling misrepresentation/fraud, regulatory oversight of products or establishment of effective customer protection agencies could be thought of.

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