Saturday, March 26, 2016

Basel Committee Core Principles for Effective Financial Inclusion

Bank for International Settlements released a consultative document in December 2015, entitled: “Guidance on the application of the Core principles for effective banking supervision to the regulation and supervision of institutions relevant to financial inclusion” inviting comments before 31st March 3016. This document meant for effective supervision of the non-banking financial intermediaries is the outcome of a survey Basel Committee on Banking Supervision (BCBS) conducted a range of practice survey in 2013 (ROP) on the regulation and supervision of institutions of relevance to financial inclusion and on financial consumer protection across 59 jurisdictions with 52 respondents.

I have kept the following ground rules in view while reviewing the Draft Document:
Ø  Cost of compliance must be less than the cost of avoidance.
Ø  Regulations and rules must be simple and straight forward inviting easy compliance.
Ø  Multiple regulators impacting on financial inclusion agenda should be able to strengthen and accelerate the implementation.
Ø  Financial Institutions engaged in financial inclusion should be able to deal with it as a portfolio for generating data and information required for proper regulation.
Ø  Instruments, tools and techniques of supervision should be uniform across the nations.
Ø  Financial Inclusion achievements should be subject to social audit as well.

Monday, March 21, 2016

Is data meant to please the bosses in Banks?

“The growth in CASA deposits moderated due to decline in savings deposits that in turn got reflected in overall decline in deposit growth.
Bank-group wise, PSBs recorded decline in CASA deposits while PVBs and FBs recorded higher growth during 2014-15.” 
The decline would have been more alarming but for JAN Dhan.

Sunday, March 20, 2016

Nature's Bounty

Sweet Memories
Calgary -2

The lovely morning Sun
Shy of emitting heat
In the dazzling white snow
Breaking into the cool dark homes
Courteously spreads the bright light.

Skylarks flying high
Watching the deer’s merry run
Collect the soft branches of dry trees
Only to make a beautiful nest
For their eggs to grow to safe wings.

Rabbits white and lumpy
Rolling and running
Playing in the snow carpet of my backyard
Enjoying all the smiles of nature
On the waning winter’s Calgary


Thursday, March 10, 2016

Consolidation of Banks is no cure to the Ills

James Crabtree of the FT reporting on the predicament of the then PM Singh commented in March 2012 that Indian Banking was at the brink and needed heavy capital infusion to catch up with Basel III requirements and clean up to measure up to the requirements of economic growth to revive to beyond 7%.

The position worsened ever since. Gyan Sangam (Intellectual Confluence), the second after the formation of the present government that discussed the revamp of the banks a couple of days back at Gurgaon, Delhi have not offered any better wisdom than loud whispers of consolidation of banks. Is consolidation of banks the right solution?

Wednesday, March 2, 2016

Budget 2016 Transformational Budget

Karl Marx once said speaking of the goals of economic satisfaction: ‘each according to his needs’ (communists achieved it); ‘each according to his ability’ (capitalists achieved it) -- extend this to each according to his greed (modern economies surpassed). Democracy means great expectations and the FM has to meet these expectations in the most unenviable challenging environment.

The stunning defeat in the States’ elections during the year made the FM look at Rural India, agriculture, irrigation and infrastructure in this budget as key to regain its political prominence. Noses ground to the soil made different voices allocating more than 8% of the budget 16-17 to agriculture, rural development and irrigation. The Economic Survey forebode it to a degree.

Economic Survey 2016 read between the lines indicates that the economy would travel in uncertain growth territory due to weak growth of world output (around 3%), declining commodity markets, turbulent financial markets, and volatile exchange rates. The current expectation of 7-7.75% growth during the current year and 8% in the succeeding years is the hopeful. Agriculture sector constituting around 15% of GDP at current prices having 60% of population dependent on it just ended with 1.1%; manufacturing with Make-in-India push surged to 9.5% and services in spite of start-up and digital India efforts slackened to 10.1%.  Unless manufacturing start-ups attract angel funds in a big way it would be difficult to show a double digit growth in the sector as the credit markets are weak.