beautifulgame Posted June 19, 2016 Posted June 19, 2016 ^ And the point is it still is in the hands of RBI to set monetory policy they will have majority .So it's inaccurate to say this monetary bill was why his gig was up . In most sensible economies its the federal bank that decides these ecomony matters not the governments . We Indians will be the losers not Raguram Rajan for forcing him out . Obviously he will look like a Hawk to the big corporates who wanted to hide the real state of their B/S and keep restructuring the loans and live in the bubble for as long as possible wasting public money . Not really a coincidence that all the attacks started on Rajan soon after he talked about not restructuring bad loans and publishing NPA accounts in public domain
randomGuy Posted June 19, 2016 Posted June 19, 2016 Raghuram Rajan did a good job. - Making PSU banks honestly identify the NPAs is very good. Hiring people from private space to head these PSU banks. Making new framework and regulations etc. These steps will help in long run. - Repo rate at 6.5% is justified since CPI is at ~5.5%. unfortunately most development and growth related things depend on governments not on central banks. so if today, theres an honest and hardworking govt. , the country will grow and tomorrow if the govt is lazy and corrupt, it won't I don't like giving too much hero-worship for any one person. Institutions are more important. G_B_ 1
Malcolm Merlyn Posted June 19, 2016 Author Posted June 19, 2016 Expect some low profile lightweight yes man to be the replacement.Poor stuff by Modi govt.The economy doesnt depend on rate cuts only,if it does then something needs to be done to correct that. tweaker 1
G_B_ Posted June 19, 2016 Posted June 19, 2016 2 hours ago, beautifulgame said: ^ And the point is it still is in the hands of RBI to set monetory policy they will have majority .So it's inaccurate to say this monetary bill was why his gig was up . In most sensible economies its the federal bank that decides these ecomony matters not the governments . We Indians will be the losers not Raguram Rajan for forcing him out . Obviously he will look like a Hawk to the big corporates who wanted to hide the real state of their B/S and keep restructuring the loans and live in the bubble for as long as possible wasting public money . Not really a coincidence that all the attacks started on Rajan soon after he talked about not restructuring bad loans and publishing NPA accounts in public domain Your totally missing the point. RBI is a highly diverse organisation when it comes to opinion on everything. Impossible for Rajan or any central banker to get all three to vote on similar lines when it comes to 50-50 calls. In contrast government appointees will vote with government 90% of the time. The united kingdom has a similar monetary policy committee and most of the time the banks vote in line with what the government wants. The power of the RBI chairman has permanently been clipped. The attacks on Rajan have always been there. You are more than free to google what ex FM Yadhwant Sinha (who has been a critic of Modi within the BJP) has had to say about Rajan. It to do with rate cuts and nothing to do with NPAs. Rajan himself said that NPA crisis would be tided over by March 2017. He will be stepping down in Sept. So thats two quarters. You need to stop making blind statements and dig deeper. Many NPA's in the mining sector for example were viable loans which became NPA's due to ruling from the supreme court. Some 20% of NPA's are bad loans made to farmers. Be rational and have a detailed look at the NPA's. Business is hard to do in India. Even viable loans can become NPA's through no fault of the business houses due to delayed policy making. Take Vijay Mallya. Just after Kingfisher folded, government introduced FDI in aviation. Potentially could have been bought out by Eitihad and this whole fiasco of him dodging debt would have been totally avoided. Its not a black or white issue. It has multiple shades of grey. A big chunk of NPA's built up due to lack of reforms by the UPA regime. I know a personal example, a piece of land near our apartment in Mumbai belonged to Godrej. They got loans from SBI to build a commercial complex of office space and labs to target the bio technology industry. They also got permission of the relevant authorities. A few months before construction a big group of people from Uttar Pradesh came there and set up their slums. The matter is still in the courts because these slum dwellers (supported by NGO's) claim they have been there for 20 years. As a result this loan from the SBI has become an NPA. So i am asking you, how exactly is Godrej to blame for this? Is it their fault people just took over their land?
G_B_ Posted June 19, 2016 Posted June 19, 2016 And with regards to tackling NPA's (1)The government has passed the bankruptcy code. Action will happen within 180 days of a business folding instead of dragging on for months. (2) SEBI has barred willful defaulters from raising capital via the share market (3) Smaller government banking outfits have been merged into SBI. This tend will continue IMO till India gets about 5-6 government banks only to improve transparency. http://www.newsx.com/national/32501-six-banks-to-merge-with-sbi-sbi-chief-says-win-win-for-all (4) The government is passing reforms. Recently the new aviation policy has been passed. NPA's in the aviation sector are expected to reduce. (5) By a series of other reforms such as the Aadhar bill directly transferring benefits into bank accounts and in general encouraging opening of bank accounts, deposits into government banks have been extremely healthy which will further help tide over the crisis of rising NPA's quickly. So the Modi government has actually attacked the root cause of these NPA's. One question the Rajan supporters need to answer is this. He was appointed RBI head in 2013 September. The banks lent like no tomorrow from September 2013 to May 2014 as the UPA government tried to pump money into the economy to boost their chances of winning. Why was Rajan silent and why did he do nothing back then? Surely prevention is better than the cure?
beautifulgame Posted June 19, 2016 Posted June 19, 2016 Your totally missing the point. RBI is a highly diverse organisation when it comes to opinion on everything. Impossible for Rajan or any central banker to get all three to vote on similar lines when it comes to 50-50 calls. In contrast government appointees will vote with government 90% of the time. The united kingdom has a similar monetary policy committee and most of the time the banks vote in line with what the government wants. The power of the RBI chairman has permanently been clipped. The attacks on Rajan have always been there. You are more than free to google what ex FM Yadhwant Sinha (who has been a critic of Modi within the BJP) has had to say about Rajan. It to do with rate cuts and nothing to do with NPAs. Rajan himself said that NPA crisis would be tided over by March 2017. He will be stepping down in Sept. So thats two quarters. You need to stop making blind statements and dig deeper. Many NPA's in the mining sector for example were viable loans which became NPA's due to ruling from the supreme court. Some 20% of NPA's are bad loans made to farmers. Be rational and have a detailed look at the NPA's. Business is hard to do in India. Even viable loans can become NPA's through no fault of the business houses due to delayed policy making. Take Vijay Mallya. Just after Kingfisher folded, government introduced FDI in aviation. Potentially could have been bought out by Eitihad and this whole fiasco of him dodging debt would have been totally avoided. Its not a black or white issue. It has multiple shades of grey. A big chunk of NPA's built up due to lack of reforms by the UPA regime. I know a personal example, a piece of land near our apartment in Mumbai belonged to Godrej. They got loans from SBI to build a commercial complex of office space and labs to target the bio technology industry. They also got permission of the relevant authorities. A few months before construction a big group of people from Uttar Pradesh came there and set up their slums. The matter is still in the courts because these slum dwellers (supported by NGO's) claim they have been there for 20 years. As a result this loan from the SBI has become an NPA. So i am asking you, how exactly is Godrej to blame for this? Is it their fault people just took over their land? I was talking about the issue of debt restructuring and NPA hiding and you are referring to NPA recovery .Totally different
beautifulgame Posted June 19, 2016 Posted June 19, 2016 And with regards to tackling NPA's (1)The government has passed the bankruptcy code. Action will happen within 180 days of a business folding instead of dragging on for months. (2) SEBI has barred willful defaulters from raising capital via the share market (3) Smaller government banking outfits have been merged into SBI. This tend will continue IMO till India gets about 5-6 government banks only to improve transparency. http://www.newsx.com/national/32501-six-banks-to-merge-with-sbi-sbi-chief-says-win-win-for-all (4) The government is passing reforms. Recently the new aviation policy has been passed. NPA's in the aviation sector are expected to reduce. (5) By a series of other reforms such as the Aadhar bill directly transferring benefits into bank accounts and in general encouraging opening of bank accounts, deposits into government banks have been extremely healthy which will further help tide over the crisis of rising NPA's quickly. So the Modi government has actually attacked the root cause of these NPA's. One question the Rajan supporters need to answer is this. He was appointed RBI head in 2013 September. The banks lent like no tomorrow from September 2013 to May 2014 as the UPA government tried to pump money into the economy to boost their chances of winning. Why was Rajan silent and why did he do nothing back then? Surely prevention is better than the cure? Honestly I don't see how Rajan is against any of this or anyone has said the BJP hasn't done anything about mounting NPA's .But all these are after an account became NPA. As for the last point RBI governors have not much power when it comes to these loans by Individual banks .They are mostly under the purview of Finance ministry . For example Govt is currently asking banks to relentlessly give loans under Mudra and Stand up India schemes .And they have monthly targets to achieve and they are not reported to the RBI but finance ministry. Since most EDs and chairmen's wants to be in the good grace of government they they are more than eager to meet these targets .That's what happened in 13-14 and that's what happening now
G_B_ Posted June 19, 2016 Posted June 19, 2016 I was talking about the issue of debt restructuring and NPA hiding and you are referring to NPA recovery .Totally different How is it different? You talk about NPA hiding. Many of the npas in the aviation sector a few months down the line would not be an NPA. An NPA is not a loan which can never be recovered. Jet airways would be an NPA if not for oil prices falling. Even classification and restructuring is a grey line. The whole steel industry ATM is probably an NPA. Few years ago it was not. Few years down the line who knows. The banks in many cases were not hiding anything. Just wanted waiting for the business cycle Sent from my Wileyfox Swift using Tapatalk
G_B_ Posted June 19, 2016 Posted June 19, 2016 Honestly I don't see how Rajan is against any of this or anyone has said the BJP hasn't done anything about mounting NPA's .But all these are after an account became NPA. As for the last point RBI governors have not much power when it comes to these loans by Individual banks .They are mostly under the purview of Finance ministry . For example Govt is currently asking banks to relentlessly give loans under Mudra and Stand up India schemes .And they have monthly targets to achieve and they are not reported to the RBI but finance ministry. Since most EDs and chairmen's wants to be in the good grace of government they they are more than eager to meet these targets .That's what happened in 13-14 and that's what happening now These are not big loans. Start up India is effectively seed money. Different from loans to mega projects. Its effectively microfinance. Loans less than 10 lakhs plus they have to fulfill strict guidelines and the government has put in certain conditions of collateral in place. In a lot of these npas especially in the mining sector even the mine which is collateral cannot be taken into custody. The debt recovery system works when it comes to the small guy in non farming situations. So these small loans can be recovered because there are no big lawyers to thwart the bank from foreclosing tangible assets. Sent from my Wileyfox Swift using Tapatalk
BeautifulGame Posted June 19, 2016 Posted June 19, 2016 1 hour ago, G_B_ said: How is it different? You talk about NPA hiding. Many of the npas in the aviation sector a few months down the line would not be an NPA. An NPA is not a loan which can never be recovered. Jet airways would be an NPA if not for oil prices falling. Even classification and restructuring is a grey line. The whole steel industry ATM is probably an NPA. Few years ago it was not. Few years down the line who knows. The banks in many cases were not hiding anything. Just wanted waiting for the business cycle Sent from my Wileyfox Swift using Tapatalk They are different because restructuring a bad loan means it will be considered an asset in Balance sheet and make it look an asset mean it creates an imaginary profit in the balance sheet ..Whereas when an account is NPA mean banks have to keep provisioning whereas when a loan is restructured they can claim the interest as profit.And also can take measures to recover the loan. NPA hiding is completely different again . It meanly refers to retail and SME-MSME loans that banks regularly hid to again and again by unofficially restructuring it for years to show profit.Why do you think suddenly all the PSU banks have declared huge losses in this march quarter.Because RBI forced clean up of this system by introducing the real time NPA concept in this February to flush out these bad loans to reflect in the B/S.This was the major factor behind the losses in the Bank balance sheets this march not Corporate loans as u seem to assume. As for restructuring ,again the problem with restructuring of corporate bad loans was that they were repeatedly restructured to keep them just running through deviations at the highest even though RBI guidelines says any loan can be restructured only once .Because of this restructuring instead of going after these corporates at the earliest stage itself when the collateral might have been enough to cover the outstanding value ,But because of these repeated restructurings the loan outstanding were allowed to grow to large proportions and now banks are struglling to recover even a significant percentage of them. P.S. There is no loan that can not be recovered in Indian banking system.If u are referring to written off accounts again Banks have full authority to recover the loans.They are written off for the convenience of Balance sheets.
BeautifulGame Posted June 19, 2016 Posted June 19, 2016 1 hour ago, G_B_ said: These are not big loans. Start up India is effectively seed money. Different from loans to mega projects. Its effectively microfinance. Loans less than 10 lakhs plus they have to fulfill strict guidelines and the government has put in certain conditions of collateral in place. In a lot of these npas especially in the mining sector even the mine which is collateral cannot be taken into custody. The debt recovery system works when it comes to the small guy in non farming situations. So these small loans can be recovered because there are no big lawyers to thwart the bank from foreclosing tangible assets. Sent from my Wileyfox Swift using Tapatalk I thought you were referring to the money Congress were pumping into the SME-MSME sector during that period. The debt recovery system works against small loans because Banks have the option of SARFAESI act and CGTMSE coverage that govt provided for SME/MSME sectors .Not because big lawyers can thwart from foreclosing tangible assets .
beautifulgame Posted June 20, 2016 Posted June 20, 2016 Govt were willing to give him a full second term but Rajan wanted a shorter stay and ultimately decided to leave . economictimes
asterix Posted June 20, 2016 Posted June 20, 2016 The question is not whether we have another suitable alternative but whether they will similar courage as Rajan to effectively take these big decisions . The NPA concept came into banking sectors in early 90s and yet it took Rajan to implement real time NPA concept in our banking system .And that's just one example . There were plenty of issues in financial sector that were pending for years which banks and financial sector were finally forced to carry out despite huge outcry . The fear is whether the next Governor will power to carry out these reforms or will go back to the artificial bubble we were living in .Somehow doubt it . This NDA Govt. has been very patient with many of UPA appointees for various reasons. As in the link you posted Rajan wanted to have a shorter second term and he cunningly announced his decision to not continue just before BREXIT vote... This Rajan guy was opinionated in many issues which were not in his remit. This govt has every right to have their own appointees. After all they might only get 5years to do all the work. It's not like you get decades to rule & help India grow... Let UPA do all the good work when they comeback in 2019. diga and tweaker 2
coffee_rules Posted June 20, 2016 Posted June 20, 2016 (edited) I have not heard of a RBI governor so much high profile and in the news. Except maybe MMS, only after he became a FM. Why should there be so much debate on a post appointed by government. In the past, every new government has had a new appointee and even now the CongI appointee has gone. Why the big fuss over it? Let him come back when Congress gets voted back in Until then, anybody can do. Before 2013, before Rajan, RBI was functioning and it was still all OK. India will not cease to exist after Rajan goes. Somebody else will come, and RBI is run by a panel/board and not by a dictator! Edited June 20, 2016 by coffee_rules asterix 1
Malcolm Merlyn Posted June 20, 2016 Author Posted June 20, 2016 This NDA Govt. has been very patient with many of UPA appointees for various reasons. As in the link you posted Rajan wanted to have a shorter second term and he cunningly announced his decision to not continue just before BREXIT vote... This Rajan guy was opinionated in many issues which were not in his remit. This govt has every right to have their own appointees. After all they might only get 5years to do all the work. It's not like you get decades to rule & help India grow... Let UPA do all the good work when they comeback in 2019. This is such a consipracy story that Pakistani will be proud.
diga Posted June 20, 2016 Posted June 20, 2016 Mkts shrug off Rajan exit... Congi's(especially the NDTV crowd) will not be happy Why are the congi's speaking of doomsday on Rajan's exit? Did not the markets rise on anticipation of Modi's win in 2013-14? Did not they expect a more reform oriented govt than UPA? Dont we have enough talent to replace Rajan?
diga Posted June 20, 2016 Posted June 20, 2016 6 hours ago, asterix said: This NDA Govt. has been very patient with many of UPA appointees for various reasons. As in the link you posted Rajan wanted to have a shorter second term and he cunningly announced his decision to not continue just before BREXIT vote... This Rajan guy was opinionated in many issues which were not in his remit. This govt has every right to have their own appointees. After all they might only get 5years to do all the work. It's not like you get decades to rule & help India grow... Let UPA do all the good work when they comeback in 2019. :) one more conspiracy theory below UPA fund mgrs want to pull down the mkt & govt thro LIC wants to prop it up asterix 1
asterix Posted June 21, 2016 Posted June 21, 2016 http://www.catchnews.com/pov/how-raghuram-rajan-failed-india-s-middle-class-1465913732.html Interesting article...
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