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

H T Parekh Finance Column

H T Parekh Finance Column
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...
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...
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...
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...
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...
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...
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...
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...
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...
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-...
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...
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...
The Financial Sector Legislative Reforms Commission has exploited its ambiguous terms of reference to suggest a complete revamp of financial regulation. The recommendations, if accepted, would shift...
Where to invest? Those with cash or charged with investing other peoples’ savings have had a serious headache over the past two years. The world is a deeply uncertain place right now. This normally...
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...
Over the years, the ratings system and, therefore, the ratings fi rms have become a part of the regulatory framework in many countries which has given them enormous infl uence in the fi nancial...
The Vickers Commission in the United Kingdom has advocated ring-fencing of core banking activities; the Volcker Rule in the United States prohibits banks from engaging in certain kinds of investment...
The government and the Reserve Bank of India have taken a series of measures in recent weeks to attract a larger volume of foreign debt capital. These measures only increase the economy's dependence...
agree to a fiscal pact in December 2011 India Dimmed and to support a Greek restructuring plan gave the European Central Bank (ECB) cover to ignore the intentions of its Avinash Persaud founding...
The public report of the investigation by the United Kingdom's Financial Services Authority into the failure and subsequent bailout of the Royal Bank of Scotland in 2008 highlights deficiencies in...
The decision to allow qualified foreign investors to invest in India's equity markets is a source of concern both for the kind of funds that will be attracted and what this says about the government'...
India does not suffer the euro-zone problem of a federal central bank with a restricted mandate. What India does have in common with Europe is capital-constrained banks stuffed full of government...
 Taxing the Financial Sector Avinash Persaud On Wednesday, 28 September, the European Commission (EC) proposed a European Union (EU)-wide 0.1% tax on bond and equity transactions and 0.01% on...
The Reserve Bank of India has published its draft guidelines for new entrants to the banking sector. It would have been advisable for the RBI to spell out the principal objective in licensing new...
The agreement in the United States on raising the debt ceiling that was reached at the last minute need not have been a cliffhanger. The broad contours of a deal and whose interests it would serve...
As India officials look at the international debate on "too-bigto- fail" issues they should reflect on the more general problem that while there is now universal familiarity with the words systemic...
The experience of the sub-prime crisis has underlined the virtues of caution in banking sector liberalisation. It has brought home the necessity of balancing efficiency and stability in banking...
Following the reiteration in the Union Budget of the decision of the government and the central bank to issue new bank licences, the union cabinet has approved certain amendments to the Banking...
An ideal system of global liquidity for the official sector is one which both lubricates international commerce with low risk while facilitating the smooth adjustment of global imbalances when these...
One cannot argue that the high unemployment today in the advanced economies calls for a Keynesian solution. Unlike the 1930s, which were characterised by high unemployment and large savings, it is...
The Reserve Bank of India's discussion paper on entry of new banks in the private sector lists a number of issues in the next round of licensing of such banks. If the new private banks are to focus...
The global banking lobby has managed to block structural reform aimed at averting another financial crisis as in 2008. It first stalled radical reform measures to restrict the activities of banks and...
Cross-border finance will increasingly be shaped by the fiscal crisis in the advanced countries.
That complex financial derivatives lay at the root of the financial crisis is a seductive but wrong idea. When liabilities are complex assets cannot be simple, otherwise we will have a mismatch...
The world banking system has been adjusting to the post-crisis deleveraging in the household and corporate sectors. At the same time, leverage in government has shot up as governments have intervened...
Why has the International Monetary Fund argued, through a staff paper, that there could be circumstances where capital controls may be warranted. It could be that since the current surge in capital...
What specific failings, if any, of the current regulatory structure have led to the proposed creation of the Financial Stability and Development Council is a question that needs to be answered by...
The old idea about the "use" of foreign exchange reserves is now being expressed in a new form. It is suggested that a part of the reserves could be drawn on to set up a sovereign wealth fund to...
The notion that in reforming the financial system we should concentrate our efforts on making sure that banks are not "too big to fail" is based on an illusion. What we are looking for is regulation...
There have been a number of commissions and committees on the financial crisis over the past year, which have largely covered the same ground in their analysis and recommendations for reform of the...
Rising sovereign or sovereignguaranteed debt followed on occasion by sovereign default was until recently a problem faced by developing countries. Now the pattern has turned upside down. It is the...
The US has followed a cautious approach in tackling the current crisis in banking. It has refused to tackle the crisis head on, it has instead followed an "endure and wait" approach. What of...
The road to greater legitimacy for the International Monetary Fund and the World Bank does not lie merely through greater "democracy". Both the creditors and debtors of these international financial...
The Committee on Financial Sector Assessment has found Indian banking to be in sound shape. However, while liberalisation and financial integration may not have resulted in excess exposure of Indian...
To what degree does the work programme and the initial decisions mandated by the g-20 address the issues that are of concern to the major emerging markets, and what cues should the latter group...
The sub-prime crisis that erupted in the United States was the first manifestation of the larger financial crisis that has since swept across the world. What early lessons in regulation - on capital...
Financial crashes do not occur randomly, but generally follow booms. Through a number of avenues, sometimes regulatory, sometimes not, though often in the name of risk-sensitivity, sophistication and...
The financial crisis has made clear that the accumulation of risk and the occurrence of crises are almost inevitable in a self-regulated financial system governed by a framework of the Basel kind...
It is somewhat misleading to label the present crisis a "subprime crisis". This suggests that when banks make subprime loans, that is, practise financial inclusion, they are apt to get into trouble...
The decision to shift the management of public debt from the Reserve Bank of India to a specialised debt office under the ministry of finance offers an opportunity to explore ways in which the costs...
The new governor of the Reserve Bank of India will have to navigate a path that brings international recognition of India's banking supervision and standards, but avoids the worse pitfalls of the "...
Is India heading towards its own sub-prime crisis? There have been a number of developments that suggest such an eventuality is possible. Bank credit has been growing very rapidly in recent years,...
What are the benefits and costs to India of an enlarged foreign bank presence? Going by the three important criteria of access to financial services, efficiency and provision of credit, it is...
In some quarters, the Reserve Bank of India has been accused of resisting rupee appreciation through active exchange rate interventions and thus worsening inflation. While liquidity explosion becomes...
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