Bankers seek a cut in CRR

Given the present stress on liquidity—which has seen banks draw over Rs1,00,000 crore from the repo window daily—there is a growing clamour for the RBI to cut the CRR

Mumbai: Citing bleak macroeconomic condition, bankers have sought a cut in the percentage of deposits they keep with the central bank, or CRR (cash reserve ratio), as well as in the policy rates from the Reserve Bank of India (RBI) in the forthcoming third quarter monetary policy announcement, reports PTI.

“We have pointed out to the governor the slowing growth indicators as well the inflation index. We have also told him that if growth were to be taken as a priority, then it calls for a reduction in the CRR as well as policy rates,” bankers’ umbrella body Indian Banks Association (IBA) chief executive K Ramakrishnan told PTI here after the customary pre-policy interaction with the RBI mandarins.

The RBI is scheduled to come out with its third quarterly monetary policy review on 24th January.

Mr Ramakrishnan said there has been growing concern over liquidity in the past few months, while the RBI’s 13 rate hikes in a row till October have affected credit growth.

After a robust 8.5% growth last fiscal, gross domestic product (GDP) growth has slipped to 6.9% in the second quarter this fiscal, while the October IIP (Index of Industrial Production) contracted by 5.1%.

Inflation, after hovering over 9% throughout the year, is expected to come down as food price index, after six long years, fell into the negative territory at -3.36% for the week ended 24th December.

Food inflation has about 17% weightage in the core inflation.

Core inflation for November stood at 9.11% and the December numbers are expected later this week.

Mr Ramakrishnan said the bankers also requested the RBI to pay them interest on the CRR deposits, but RBI has refused to heed to this demand citing technical difficulties. Till the last amendment, which deleted the CRR interest clause by mistake, banks used to get nominal interest on the CRR.

Meanwhile, leading bankers, who met RBI deputy governor Subir Gokarn were evasive when asked about the specific requests put forth by them.

“I would not be able to tell you exactly what are all the things which we discussed inside... we have given a good view of what we have seen in the market,” Bank of Baroda chairman and managing director MD Mallya, who also heads the IBA, told reporters after the meeting.

Mortgage major HDFC’s chief executive Keki Mistry had on Monday said he expects a CRR cut in the policy.

Stepping out of the RBI headquarters, the country’s second largest lender ICICI Bank’s managing director and chief executive Chanda Kochhar said bankers discussed state of economy, liquidity conditions, asset quality and economic growth, but refused to share the specifics.

Mr Mallya said as of now, credit growth has been around 17% year-on-year, falling below 18% for the first time.

“At the moment we still look at 18% for the full year. It certainly depends on how exactly the subsequent two months will go out,” he said.

He added that asset quality is an important aspect that banks need to look out for in the present scenario and referred to textile and steel as the sectors from where stress is emanating.

With a focus on bringing down inflation, the RBI has increased its key rates a record 13 times till the October policy review. However, at the 16th December mid-quarter policy review, the apex bank chose to pause the rate hike and also hinted at a policy reversal as growth was getting hit.

In the backdrop of this, all eyes are now resting on the action RBI chooses to take in its review.

Given the present stress on liquidity—which has seen banks draw over Rs1,00,000 crore from the repo window daily—there is a growing clamour for the Mint Road to cut the CRR.


What's wrong if innovative methods are used to dispose off huge pile of second appeals in RTI?

Acting Chief State Information Commissioner Vijay Kuvalekar disposed off 457 out of 607 appeals in a Special Appeal Disposal programme held in Mumbai recently, a vital step towards clearing 18,677 appeals piled up in Maharashtra

Consider this dismal picture:

Number of second appeals pending in Maharashtra: 18,677
Number of State Information Commissioners (SICs): Five out of which three hold additional charge of another division, besides their own

Due to the sheer large number of appeals and inadequate number of SICs as well as clerical staff, the appeals in the normal course would take more than two years to be heard.            

Consider now the innovative approach:

  • Maharashtra SIC Vijay Kuvalekar worked upon a unique solution to quicken disposal of appeals by holding a `Special Appeal Disposal Programme' (SADP) in Mumbai between 4th January and 7th January and disposed off 457 out of 607 second appeals.

Consider the beneficiaries of this programme:

  •  A government officer who was compulsorily retired by the government in 1994 did not get his rightful financial benefits like provident fund (PF) and gratuity despite court orders. His RTI (Right to Information) application had met with indifference; hence he filed a second appeal in Mr Kuvalekar's office. This case was one of the many cases sorted out in the SADP. Fearing that they would be slammed with contempt of court, the concerned deputy secretary from the department signed a written order stating that the officer would receive his dues of Rs92,850 and showed the proof on the day of the programme. The next day, he also produced a receipt to prove that the money was received by the aggrieved officer.
  • One fine day, without any public notice, a ST bus which was ferrying hundreds of school and college-going children from a village to Ratnagiri everyday was stopped. A villager filed an RTI application seeking details of why the bus was discontinued abruptly. He got a reply stating it was not economically viable to run the bus service. The villager again invoked RTI seeking documents which would prove that the bus was incurring financial losses. He filed a second appeal in Mr Kuvalekar's office as he did not get any further reply from the PIO. On the day of the SADP, the officer, perhaps wary of the consequences, gave a written statement that the bus would be re-started on the route within a week.
  •   In another case, a poor man waited over three years but did not get his ration card. He filed an RTI application to find out the reasons but the PIO dodged his queries. Finally, he went in for second appeal. During the SADP, the officer promised to give him his ration card within a week. The officer was also asked to give the compliance report with the copy of the ration card given to him within seven days.
  •   In yet another disposal, the authorities were not taking cognizance of an unauthorized construction despite invoking the RTI. During one of the sessions of the SADP they promised to issue a notice within three days with a copy of the notice to the applicant.

What is this SADP invented by Mr Kuvalekar?
This is not a hearing, says Mr Kuvalekar and it is not compulsory to participate. The applicant as well as the appellant has the choice to ask for the conventional ‘hearing’.  To give the background, second appeals comprise application filed with the information commissioners when an applicant does not get the required information or gets false or no information from the Public Information Officer (PIO). The applicant could be also unhappy with the decision of the First Appellate Authority (FAA) or could simultaneously file second appeal along with first appeal. However, these second appeals take a long time to be heard due to a huge backlog, thus making the RTI Act irrelevant as most of the information sought by applicants is time bound. Backlogs in Maharashtra date back to 2008. Presently, Mumbai accounts for the highest number of pending second appeals—4,661 while Pune follows with 3,694 appeals.

In this Special Appeals Disposal format, the applicant, the PIO and the FAA sit together, discuss and decide upon the course of action. “We do not take part in the dialogue,”' says Mr Kuvalekar, “but facilitate the three of them to discuss matters, threadbare.” If the matter is resolved, then the information commissioner will dispose off the appeal. Otherwise, a form will be filled by the PIO and the applicant and a formal hearing will take place at a later stage. It’s important to note, that, although 457 second appeals were disposed off between 3rd January and 5th January, a written order has to be passed by Mr Kuvalekar. Thanks to government apathy in filling up clerical staff, especially stenographers, in information commissioners’ offices, including Mr Kuvalekar’s, this exercise itself will take time. Point to note is that Mr Kuvalekar retires on 7th February.

Special Appeals Disposal lauded
Vijay Kuvalekar’s presentation at the National Conference of Information Commissioners was highly lauded. The Orissa and the Haryana state information commissioners have decided to replicate this model in their states.  State information commissioner of Gujarat, K Rajgopal attended the disposal programme for an entire day.

RTI activist Krishnaraj Rao has vociferously criticized this method of disposals saying it is short-circuiting and bypassing of the law.
However, RTI activist Vijay Kumbhar insists that, “As per my knowledge, appeal proceeding under Section 19 of the RTI Act and complaint under Section 18 are civil proceedings, which are always compoundable and open for an out-of-the-court settlement. So I don’t see any illegality in what Mr Kuvalekar is doing. Also, mere opposition on theoretical grounds ultimately adversely affects the RTI applicant. Do we have any other remedy to dispose pending appeals in a faster way? Isn’t it our duty to support or give solution to a problem instead of just opposing it?”

Another noted RTI activist, Bhaskar Prabhu states, “There is nothing wrong in conducting such special appeal programmes. If someone does not agree to it, then anyway it is not compulsory and he can wait for normal course of hearing.'” However, Mr Prabhu feels that the written order should be sent at the earliest.

RTI activist Manoj Pai said, “The appeal procedures are all quasi-judicial in nature. Hence, the redressal or settlements of appeals are legitimate. As long as such a solution provides full disclosure of the information, I see no reason as to why we should not support this cause. We are all here to find a solution to problems and not create hurdles.”

(Vinita Deshmukh is consulting editor of Moneylife. She is also an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart—Ashok Kamte” with Vinita Kamte. She can be reached at [email protected])


Inherent competitive advantage Tier 2 and Tier 3 cities possess

Unless Tier 2 and Tier 3 cities as well as the Tier 1 cities give priority to infrastructure for walking, cycling and BRTS, the inherent competitive advantage these non-metropolitan cities have to develop will be lost leading to greater migration to tier I cities, causing them also to suffer due to inadequateness of the infrastructure.

The nation is in the process of rapid urbanization. This does not mean and need not mean new urban centres developing. Currently there are 48 cities which are one-million-plus, which will become 58 by 2021.These include 15 cities that are two-million-plus which will become 20 by 2021.

Maharashtra has three two-million-plus cities (Mumbai, Pune and Nagpur), seven one-million-plus cities (Thane, Pimpri-Chinchwad, Nashik, Kalyan-Dombivli, Vasai-Virar, Aurangabad and Navi Mumbai) and eight half-million-plus cities (Solapur, Mira-Bhayandar, Bhiwandi-Nizampur, Amravati, Nanded-Waghala, Ulhasnagar, Sangli-Miraj-Kupwad and Akola). There are about four  cities of neighbouring states on the south (Hyderabad, Hubli-Dharwar, Belgavi and Bellary) which lie in reasonably close proximity while seven cities lie in the northern neighbouring states (Ahmedabad, Surat, Indore, Bhopal, Vadodara, Jabalpur and Raipur).

While different kinds of infrastructure are required to facilitate efficient running of the urban areas, it is largely the transportation sector that makes or mars quality of life of city dwellers.

Following the conventional methods of planning, there is great desire to provide infrastructure that would speed up intra-urban travel by motorized transport.

Flyovers and road widening are hallmark of this kind of infrastructure development. The casualty invariably is, chopping down of trees, not providing space for safe pedestrian movements and the non-motorized vehicles and roadside vendors. Since these exist in any city, they begin to take up the ‘widened’ carriageway spaces.

Speeding vehicles in urban areas are the main cause of large number of fatalities seen on Indian roads, in particular the roads in Maharashtra. Therefore, all road infrastructures must be designed with safety of the vulnerable section of road users and traffic calming measures kept in mind.

Considering that road congestions occur due to excessive use of motorcars, which lead to increased air and noise pollution with global warming, climate change and health repercussions, following the National Urban Transport Policy (NUTP) of minimizing use of personal motorized vehicles should be looked at with great deal of seriousness. This means providing public transport where it does not exist and improve upon it where it does.

Since practically everyone walks and as many as 15% to 30% use bicycles even in two-million-plus cities, infrastructure must give considerable importance to all of the needs of carbon neutral mode of mobility.

Recently, the committee headed by “Metro Man”, E Sreedharan recommended that private use of motorcars must be discouraged and providing parking space near Metro stations would actually encourage its use. Therefore, he went on to state that such facilities should not be provided.

However he also said that every city with two-million-plus population must plan for providing Metro rail connectivity. There is this misconceived mindset that rail-based mass rapid transit system is most efficient as it has very high capacities. The problem with such systems having very high capacities is that one has to provide a network of road public transport to feed the capacity and also provide space for parking motorcars.

Greater use of personal motorized vehicles option adds to the road congestion. The Metro rail option also requires large sums of money and the investments cannot be recovered by fare box collections. When you have so many Tier 2 Tier 3 cities demanding funds to put up Metro rail, firstly one must understand that money will go where it is likely to get recovered i.e. in mega cities (ten-million-plus) and metro cities (four-million-plus). Trickling in of funds means extended periods of construction and deteriorated quality of life over long period for a city’s citizens. It was wrong on the part of the Sreedharan Committee to recommend this and thus raise aspirations which cannot get fulfilled in all the 15 two-million-plus cities of India (three of Maharashtra) and not provide for growing transportation woes in these Tier 2 and Tier 3 cities.

The right thing to do is to have Bus Rapid Transit System (BRTS) in place at costs as low as Rs10 crore/km and enhance it with growing demand as against the elevated metro which would cost as high as Rs250 crore/km. BRTS needs to be designed, not just put in place. Frequency of service should be as high as 90 seconds if not higher. The buses need not be the big 52 seaters; even a 10 or 16 seater bus will do exceedingly well to start with. High frequency will make this workable. If the cost of running such system is high from a city’s per capita income level, then this form of public transport can be subsidised, which the government would have done so anyhow to metro rail infrastructure, 20 times of what the BRTS would require.

Even in Mumbai, the decision to go for Metro is wrong because it needs more than Rs60,000 crore; to complete the project it would take nothing less than 25-30 years and provide significantly inadequate capacity which will not ease the overcrowded suburban railway system. In the process of its implementation, besides causing hardship to Mumbai citizens, it will deprive other cities in the state from getting the much-needed infrastructure and thereby deny utilization of the inherent competitive advantages these Tier 2 and Tier 3 cities have currently.

Inter-city public transport needs to be planned; too, to meet growing demand but local needs of rural environment must be kept in mind. Since large number of road accidents take place on these roads, attention to details need to be given in designing these highways of growth. When the Tier 2 and Tier 3 cities have good inter and intra connectivity with public transport, they will begin to provide livelihood to many and the need to migrate to metro and mega cities on this count will diminish.

Utilisation of capital based on local affordability will only create islands of prosperity. If the state or the nation is to have balanced and equitable development, it must adopt large number of projects that are not highly capital intensive.

(Sudhir Badami is a civil engineer and transportation analyst. He is on Government of Maharashtra’s Steering Committee on BRTS for Mumbai and Mumbai Metropolitan Region Development Authority’s Technical Advisory Committee on BRTS for Mumbai. He is also member of Research & MIS Committee of Unified Mumbai Metropolitan Transport Authority. He was member of Bombay High Court appointed erstwhile Road Monitoring Committee (2006-07). While he has been an active campaigner against Noise for more than a decade, he is a strong believer in functioning democracy. He can be contacted on email at [email protected])



We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)