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

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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.

Banking with a Difference

The establishment of the New Development Bank by the BRICS countries is a significant development which could have some impact on multilateral lending for infrastructure in the countries of the South. But if the new bank is to make a difference and alter the international development finance landscape, democratic forces in the BRICS countries and elsewhere should pressurise their governments to act in ways that differentiate the NDB from the currently dominant global institutions in terms of funding patterns, rules and terms.

A Sovereign Debt Story

A series of events since the early 1980s have pushed developing countries to restructure their economies and integrate themselves with global markets. These policy shifts have made them highly vulnerable to external changes. One such story is that of Argentina which from the mid-1970s has gone from crisis to crisis and is now facing legal pressure from US holders of old Argentine debt.

The Next Internet Bust?

Facebook's recent colossal acquisition of WhatsApp is yet another sign that we are now in the middle of a new internet bubble. This bubble is different from that of the late 1990s in that it is being driven by excess liquidity in the system and the search for the "next big thing" like Google and Facebook.

Is Central Bank Independence Necessarily a Good Thing?

On 2 May 1997, the British Labour Party won a landslide election victory, sweeping away 18 years of Conservative rule. Rather like today’s Congress-led government in New Delhi, the air of “l’ancien regime” hung over the last few years of John Major’s government. Previously seen as having a safe...

Are Indian NBFCs Shadow Banks? Do They Pose Systemic Risks?

An ongoing debate in India is whether or not Indian non-banking fi nancial companies (NBFCs) are “shadow banks”. This question appears important because we have learned from the ongoing global fi nancial crisis that shadow banking might create systemic risks which have been defi ned “broadly as the...

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...

A New Growth Consensus?

The Reserve Bank of India and the government are taking contradictory approaches on liquidity and interest rates. The one eases liquidity but keeps interest rates high, the other promotes debt-financed consumption and pushes for cheaper consumer credit. This seems to be a new growth strategy based on a combination of liquidity infusion and interest rate reduction for consumer loans. But is this prudent? What of the fragility of the financial sector?

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...

Government's Gift to SBI Shareholders

In August 2010, the then Union Finance Minister Pranab Mukherjee sought to cut the government’s stake in the State Bank of India (SBI) from 55% to 51% and push the bank to raise more capital from the market. Good idea. But, in a course reversal, on 5 December 2012 – at a time when the government’s...

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