by admin | May 25, 2021 | Opinions
By Amulya Ganguli, In addition to the NGOs, including the one run by Teesta Setalvad, the saffron brotherhood’s new target is a formidable one – Reserve Bank of India (RBI) Governor Raghuram Rajan.
Till now, the Hindutva camp hadn’t trained its guns on one so high who is not a politician. There is little doubt, however, that the Sangh Parivar’s motive is political.
The attack on Rajan is not a frontal one. It is a flanking movement with none other than the new Bharatiya Janata Party (BJP) Rajya Sabha member, the perennially combative Subramanian Swamy, leading the charge.
It is not clear if the targeting of Rajan has the approval of the BJP’s top brass, for there are conflicting indications.
While Finance Minister Arun Jaitley disapproves of the personal nature of the attacks, he has been silent on the question of extending Rajan’s term beyond September considering that Swamy wants his immediate dismissal.
However, the problem with Swamy’s offensive – he has accused Rajan of acting at the behest US multinationals to damage the Indian small and medium industries – is that the voluble MP cannot always be taken seriously.
The reason is that he is a maverick to beat all mavericks. As a result, he is perceived of as something of a loose cannon who can go off at a tangent from his party’s line.
As much is clear from his earlier backing of the disgraced godman, Asaram Bapu, to the more recent call for building the Ram temple by the year-end, about which the BJP has been more than circumspect.
Moreover, he is supposed to have been elevated to the Rajya Sabha only to serve a specific purpose – that of needling the Nehru-Gandhis – and not open fire at random.
Swamy has been performing the first task with considerable zeal, pursuing the allegations against the Congress’s first family in the National Herald and AgustaWestland cases.
More recently, he has called upon the Enforcement Directorate to probe the supposed transgressions of the business deals of Robert Vadra, the first family’s son-in-law.
In the midst of these endeavours, the sudden turning of his attention to Rajan is surprising.
In view of the government’s eagerness to maintain friendly ties with the corporate sector, the latter’s unfavourable reaction to Swamy’s antics was only to be expected. The Confederation of Indian Industry has already expressed its displeasure.
None of this is unexpected, for Rajan is known to be a favourite of India Inc. and of the media, especially the financial newspapers.
Narendra Modi’s evasive statement on the issue – he told Wall Street Journal that Rajan’s tenure can be of no interest to the media – is unlikely to clear the scene.
In any event, Modi’s probable view is that nothing should be of interest to the media, which explains why he doesn’t hold any press conferences.
The hullabaloo created by Swamy appears to have persuaded Rajan to decide not to seek a second term although he has described the controversy as evidence of a “noisy” democracy and the “sign of its vibrancy”.
It is possible that Rajan’s observation about India being the king in a land of the blind hasn’t pleased the BJP.
Besides, he is something of an odd man out where the Hindutva camp is concerned, being a typical representative of the urbane, English-speaking, secular establishment that is vastly different from the Hindi-speaking, conservative-minded present-day rulers.
It is not impossible, therefore, that the Rashtriya Swayamsevak Sangh (RSS), the BJP’s mentor, wants to see the back of him.
After all, the RSS has succeeded in placing its nominees in most of the institutions – the Indian Council of Historical Research (ICHR), the National Book Trust, the Film and Television Institute, the Central Board of Film Certification, and so on.
The objective behind all these appointments was, first, to find sinecures for its followers and, secondly, to peddle the pro-Hindu agenda. So, why should the RBI be left in the hands of a purported secularist?
It goes without saying, however, that if India Inc’s blue-eyed boy quits office, the initial effect on the market will be worrisome.
That is not something which Modi will appreciate. But he has generally had to walk a tight rope between the predilections of the RSS and his own more open-minded attitude. There has been a constant give-and-take between him and the Nagpur patriarchs in this respect.
In some matters, Modi has had the upper hand such as in persuading the saffron fundamentalists to go easy on their ghar wapsi and love jehad campaigns.
In others, he has given way to the RSS as, for instance, in the appointments of unworthy nominees to the ICHR and other institutions.
The Rajan affair will be a major test for Modi. Will he bow to the RSS or will he allow his pro-business instincts to prevail ?
(Amulya Ganguli is a political analyst. The views expressed are personal. He can be reached at amulyaganguli@gmail.com <mailto:amulyaganguli@gmail.com>)
by admin | May 25, 2021 | Banking, Corporate, Corporate finance, News

Raghuram Rajan, Governor, Reserve Bank of India delivering inaugural speech at the SAARCFINANCE Governors’ Symposium in Mumbai
“Good policy has been essential to our stability”, said Dr. Raghuram Rajan, Governor, Reserve Bank of India in his inaugural speech at the SAARCFINANCE Governors’ Symposium held today in Mumbai. For India, undertaking a variety of structural reforms to enhance growth; outlining and adhering to a path of fiscal consolidation to reduce the fiscal deficit; containing inflation through a combination of better food management, a new inflation framework and calibrated monetary policies; and embarking on a cleanup of bad debts in the banking system so as to free bank balance sheets to support growth are elements of what India has practised in the wake of global uncertainties.
The government has also undertaken structural reforms to revive growth, including significant efforts in the agricultural sector to boost productivity through irrigation, insurance, access to markets, a strong push to deregulate business, especially for start-ups, resolve distress in power distribution companies, and an immense effort to expand financial services to the excluded through the provision of bank accounts and direct benefit transfers. Leaving aside the much anticipated Goods and Services Tax reform, a number of other significant reforms had also taken place, including the recent passage of the new Bankruptcy bill, which was likely to speed the resolution of distress tremendously. Moreover, the cleaning up of the process of allocating public resources like spectrum and mines, as well as the process of appointing critical personnel, such as, public sector bank chiefs was one of the most effective reforms undertaken by the government. “This is significantly increasing transparency in our system”, the Governor pointed out.
The Governor also talked of four elements of defence against the external imbalances namely, good policies; prudent capital flow management and swap arrangements; preventing extreme forex volatility; and building reasonable forex reserves.
While speaking of good policies in the context of the challenges SAARC countries faced in a globally interconnected world, and lauding the performance of SAARC economies, the Governor said that the region had shown continued resilience in the face of turbulent international markets, maintaining its spot as the fastest-growing region in the world. However, the region was now facing newer challenges arising from uncertainties in other parts of the world. Possible moves by the US Fed, a potential rebound of oil prices, possible Brexit, geopolitical risks in the Middle East and volatility in financial markets due to risk-on or risk-off sentiment were some of the possibilities, he pointed out. Sharp slowdown of the Chinese economy, according to him though still remained a significant risk for the global economy and the SAARC region. The sharp contraction in China’s imports over the past year, for instance, had already led to spillovers through the trade, confidence, tourism and remittance channels and SAARC nations had not been able to avert its impact. More negative externalities could follow as Chinese economy adjusted to a more sustainable path.
Further, China already suffered from the twin-ailment of overcapacity and high leverage. Bad loans in the banking system were likely to grow over current levels and in addition there might be serious weaknesses in the shadow banking system, which could feed back to banks. Both could be significant downside risks as they could have second round effects for SAARC economies. Chinese growth would depend not just on its policies, but also on growth elsewhere in the world.
As second level defences, India has taken measures, such as, being careful about foreign borrowing, especially at the very short term. In addition, government’s liberalisation of FDI regulations have resulted in record FDI inflows last financial year. Further, RBI has been moderating periods of extreme volatility in the currency through exchange intervention, though only when the movement is excessive, and increasing access to foreign exchange reserves, including pooling of reserves. India’s SAARC swap arrangement with a number of SAARC countries had been drawn on by some to alleviate short term foreign exchange needs, and had hopefully been helpful, the Governor averred.
In conclusion, the Governor said that being conscious of the role the Indian economy plays in influencing growth in other SAARC economies, India has kept the objective of securing and preserving macro-stability at the top of her agenda to avoid any negative externalities and hoped that together the SAARC countries could hopefully be an island of relative stability and co-operation in the turbulent world.
Note for editors:
SAARC1, as a regional bloc was set up in 1985 with the aim of promoting the welfare of the people of South Asia, to accelerate regional economic growth, strengthen collective self-reliance and contribute to mutual trust, understanding and appreciation of one another’s problems in the region. SAARC nations share a common goal of sustainable economic development, and face several similar developmental challenges. In terms of GDP based on purchasing power parity (PPP), SAARC’s share in the globe has increased rapidly from 4.0 per cent in 1980 to 9.0 per cent in 2016.
by admin | May 25, 2021 | Banking, News
New Delhi (IANS) The process to form the proposed Monetary Policy Committee for the Reserve Bank of India (RBI) will be initiated after the notification of the Finance Bill as an act, an official said on Tuesday.
“Process to constitute Monetary Policy Committee will be initiated after passage of Finance Bill and its notification as an Act,” Economic Affairs Secretary Shaktikanta Das said in a tweet.
At the sidelines of an event earlier in the day, Das said that the members from Reserve Bank “are known… that is already mentioned in the act itself. You have RBI governor, deputy governor and executive director. Now from the government side three independent members are to be nominated”.
As per the amendments to the RBI Act through the Finance Bill passed in the Lok Sabha, the committee will have six members, with three appointed by the RBI and three government appointees nominated by an external selection committee. The RBI governor will have the casting vote in case of a tie.
From the RBI, the committee will consist of the governor, the deputy governor in charge of monetary policy and one official nominated by the central bank.
The members of the MPC appointed by a search committee will hold office for a period of four years and would not be eligible for re-appointment.
Under the current system, the RBI governor has the veto over the existing advisory committee, composed of RBI members and outside appointees, that decides on policy rates. The governor consults a Technical Advisory Committee, but does not necessarily go by the majority opinion while deciding on the monetary policy.
by admin | May 25, 2021 | Banking, Corporate, Corporate Governance, News

Raghuram Rajan
Mumbai: (IANS) Springing a surprise, the Reserve Bank of India (RBI) on Tuesday cut its short-term lending rate by 50 basis points, but also made a pitch for it to be passed on to end-consumers in the form of cheaper personal and commercial credit.
While the repurchase rate, or the interest charged on short-term borrowings, stands cut to 6.75 percent, it will take commercial banks to lower their own lending rates for personal, automobile, housing and commercial loans to also get reduced, translating into lower EMIs.
The indexed reverse repo rate, or the interest payable by the central bank on short-term deposit, automatically stood reduced to 5.75 percent. There was no cut in the 4 percent cash reserve ratio that banks have to maintain in the form of liquid assets and designated government securities.
“Markets have transmitted Reserve Bank’s past policy actions via commercial paper and corporate bonds, but banks have done so only to a limited extent,” Reserve Bank Governor Raghuram Rajan said in the fourth bi-monthly monetary policy statement for the current fiscal year.
“Median base lending rates of banks have fallen by only about 30 basis points, despite extremely easy liquidity conditions,” the governor said.
“This is a fraction of the 75 basis points of the policy rate reduction during January-June, even after a passage of eight months since the first rate action by the Reserve Bank. Bank deposit rates have, however, been reduced significantly, suggesting that further transmission is possible.”
There was pressure this time on the central bank to cut rates from all stakeholders, including a veiled nudge from government functionaries, especially since India’s growth has been floundering and inflation and the pressure on the price line has been seemingly under control and declining.
by admin | May 25, 2021 | Corporate, Corporate finance, News
Mumbai:(IANS) Nearly 37 percent of the debt to corporate sector in India is a risk, said Reserve Bank of India (RBI) Deputy Governor S.S.Mundra on Wednesday citing a report by International Monetary Fund (IMF).
“Major concern in the global arena is about the leverage of companies which is enhanced substantially in the corporate world,” he said at the CFO Summit 2015 organised by Confederation of Indian Industry (CII) here.
Mundra said an IMF report of April 2015 states that 37 percent corporate debt in the country is a risk. Tests and reports across the world show that Indian companies are most vulnerable in stress scenarios and this poses a major concern for a chief financial officer (CFO), he said, urging CFOs to understand the interplay of debt, equity and leverage.
“Operating with thin equity is like skating on thin ice. Leverage on the other hand is like blood pressure, it should neither be too high nor too low as both are injurious,” he said, according to a CII statement.
Mundra also cautioned against companies with multiple layers of structure with a holding company on top and several step-down subsidiaries below which confuse the debt, equity and leverage structure of a company.
Pointing out the absence of women CFOs in large numbers, he said women would prove to be better CFOs as they are process-oriented while men are result-oriented.
“Truth is process is as important as the result. Hence, I believe, women would prove to be better CFOs,” he said.
Export-Import Bank of India chairman and managing director Yaduvendra Mathur said that a millennial CFO needs to be aware of global financial architecture and needs to have the capacity to look at innovative structured deals and have the expertise to leverage the intangibles.
Pointing out the changed role of CFOs, summit chairman and Mahindra and Mahindra’s group CFO and CIO V.S.Parthasarathy said: “In our volatile times, ICE provides solace. ‘I’ stands for the ability of companies to innovate and adapt. ‘C’ is for ‘Climate change’ that will dramatically alter how we do business in the future. ‘E’ is for ‘Experiential commerce’ where business is driven by the kind of experience you can trigger in your customer.”
He said a CFO plays a strategic role in scenario planning, and is expected to identify business opportunities and be value creator.