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

T T Ram MohanSubscribe to T T Ram Mohan

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.

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.

Regulating Managerial Pay in Banking

Managerial pay disparity between private sector and public sector banking in India is widening. Should the regulators address this by hiking public sector pay scales, or by curbing private sector pay? Drawing from international policy responses, the best way for India appears to be to curb variable pay components of managerial salaries as in the European Union.

BRICS Bank Future Hinges on Governance

The New Development Bank promoted by the BRICS grouping is an idea whose time has come. It will be small in relation to the Bretton Woods institutions but it can still reduce developing country dependence on the existing institutions and turn out to be an alternative source of development finance to both the members of BRICS and other developing countries. Its success, however, will depend on the quality of oversight and governance at the new bank.

Bank Privatisation by the Backdoor

The P J Nayak Committee on the governance of bank boards has proposed that the Bank Nationalisation Act and related legislation be repealed. It wants government shareholding in public sector banks to be transferred to a Bank Investment Committee that will be manned by professional bankers. The report assumes incorrectly that ownership determines board performance and that the quality of bank boards, in turn, determines bank performance. The key issues at the public sector banks, in fact, are those related to management.

Chronicles of India's Central Bank (1981-1997)

The Reserve Bank of India, Volume 4 (Parts A and B), 1981-1997 (Reserve Bank of India, Mumbai; Academic Foundation, New Delhi), 2013; pp 1348, Rs 2,195.

Mor on Financial Inclusion

Despite decades of effort, India’s record in the area of financial inclusion remains unsatisfactory. Nearly 60% of India’s population does not have a bank account; 90% of small businesses have no link with the formal financial sector. The Nachiket Mor Committee on financial inclusion, which...

Banking Structure

Following the crisis of 2007, there is renewed focus the world over on banking structure. This encompasses a number of related matters: the size, scope and number of banks, consolidation and concentration, and the degree of competition. Getting the structure right is about getting the balance right...

How Much Capital Does a Bank Need?

Most companies would think twice before operating at a debt to equity ratio (or leverage) of 2:1. Some capital-intensive businesses, such as shipping, opt for a ratio that is considered outlandish say, 5:1. But banks really take the cake. A leverage of 25:1 is not uncommon in banking. During the fi...

Is the Global Financial System Safer

The financial crisis that erupted in 2007 and is still unfolding prompted a search for reforms that would make the global financial system safer. Several initiatives have emerged. They represent an attempt at addressing flaws in the system that rendered it vulnerable to a crisis on the scale we...

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