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

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After Such Knowledge..

After Such Knowledge... THE finance minister has in recent weeks made at least one signal contribution to the corpus of economic thought. True, some bank chairmen were hand in glove with crooked brokers; the latter were advanced huge sums, either without collateral or with collateral that were fake and fraudulent. Thousands of crores of public money were siphoned away from within the nation's financial system so that a few persons, buddies of important officials in banks and public financial institutions and may be of some ministers as well, could enrich themselves. A part of this money was used for some exciting bull and bear games in the stock exchanges, leading thousands of small investors to rack and ruin. A part was also wheedled out of the country courtsey the hawala market. These bankers were nonetheless more sinned against than sinned. The real villains of the piece were such archaic monetary measures as high reserve requirements and low interest rates. These constraints bound the banks hand and foot. Their profit dipped. In the free market ambience, that could not be put up with. Bank chairmen were told so. By hook or crook, they had to rake up higher profits. They therefore were compelled to participate in the scam; that, apparently according to the finance minister, was the only way they could show a healthy balance-sheet for the banks they were in charge of. Of course the finance minister does not personally approve of such practice, but he understands how it came about.

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