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

T T Ram MohanSubscribe to T T Ram Mohan

Revamping Bank Regulation

One of Donald Trump’s big election promises was a substantial rollback of bank regulation. Trump and his Republican followers believe the regulations ushered in by the Dodd–Frank Act in the United States (US) are too onerous and too complex. They think it could render large US banks uncompetitive,...

Other Days, Other Times

T T Vijayaraghavan (TTV), who passed away recently, was a member of the core group of journalists that launched the Economic Times (ET) in 1961. TTV joined the paper as assistant editor and served it with distinction for two decades. The other key members at the inception of the paper were: P S...

Public Sector Banks Are Adrift

With credit and deposit growth slowing in key sectors and only retail credit growing, low capital adequacy ratios of banks, senior management changes in the offi ng, and bank mergers, the National Democratic Alliance government needs to ask itself what it envisages for public sector banks, and indeed for the Indian economy.

‘On-tap’ Bank Licences

Critically evaluating the draft guidelines for “on-tap” bank licences put up by the Reserve Bank of India, it is argued that India’s banking system is already sufficiently competitive, and there appear to be few who would be willing to enter the banking business. Entry of newer players, especially those with corporate backing, cannot be the priority at the moment. The priority over the next two or three years has to be the resolution of the non-performing assets problem and strengthening of the existing players.

The Changing Face of Indian Banking

Indian banking is passing through its most severe period of stress in over a decade. It is important, however, not to draw conclusions for banking policy from a snapshot of the most recent period--the totality of the post-reform experience must be taken into account. That larger experience shows that India's public sector-dominated banking system has served the economy well by improving its performance in respect of both efficiency and stability. Looking ahead, changes in governance and management are required, but it is possible to effect these within the framework of public ownership.

Fatal Flaw in Private Banking Systems

It is in the interest of banks to expand the supply of credit, and most banking regulations are designed to limit this tendency. It is in the interest of private bank managers to give in to this tendency (in self-interest) and provide credit indiscriminately, irrespective of macroeconomic considerations, as the 2007 crisis has shown. Perhaps we could all learn from India’s risk-averse public sector banks, which are stressed from time to time, but have never seen multiple bank failures.

Can Indradhanush Help Revive Public Sector Banks?

Indradhanush, the government's new plan for public sector bank reform in India, may not be the "big bang" reforms that many have been clamouring for. But the government has decided to recapitalise PSBs--a sensible change of mind. India's recapitalisation cost since the mid-1990s must be amongst the lowest worldwide, and it has helped prevent a banking crisis. Other proposed reforms in Indradhanush follow the framework put forth by the P J Nayak Committee, but fall far short of the paradigm shift policies proposed therein.

Global Banking in Retreat?

HSBC, which operates in more than 80 countries, is in the midst of a signifi cant retreat from various markets, including retail banking in Brazil and Turkey. Last year, Citibank, another global player, cut its exposure to global consumer banking by nearly half to 24 countries. The Royal Bank of...

Merger They Wrote

Indian private banks have done well over the past decade, and have allayed fears of foreign banks dominating Indian banking. Kotak calling the shots after the merger of Kotak Mahindra Bank and ING Vysya is an example of this dominance. The major player in Indian banking - public sector banks - have not been doing well, especially those with fewer than 2,000 branches. Privatising these smaller public sector banks may help protect larger PSBs, and Indian banking in general.

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