Food Inflation

Combined food inflation declined to 5.52% in February 2016, compared to 6.66% recorded for January 2016. For rural and urban areas, food inflation in February was 6.11% and 4.37%, respectively. Vegetable prices increased by 0.70% in February compared to those prevailing in January 2016. Inflation in fruit prices was -0.72% in February, while pulses were dearer by 38.30% y-o-y. Inflation for cereals stood at 2.18% and inflation for milk products was 4%. Price rise of non-vegetarian items, such as meat and fish, was 7.19% in February compared to 8.23% in January 2016.

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Will the Banking System Collapse?
This is a topic which nobody discusses, or cares about, except a few; even there things don’t move beyond discussions. This concern is about our millions of middle-class elderly senior citizens in India, whose children do not, or cannot, support them. They cannot invest their lifetime savings in businesses or stock market and are not in a position to start, or run, a small business themselves. They don’t want to take any risk at an older age. 
 
In such a scenario, the only option left for this category is to invest their money as bank fixed deposits (FDs). Now, this helpless category has so much of worrying to do. If not consciously (but subconsciously), they worry about their deteriorating health, fear of death, fear of losing their partner, loneliness, daily routine work, etc; above all, they worry about the cost of living which is going up day by day and their bank FD rates going down day by day! 
 
I will be grateful to Moneylife if it can research and let us know if a collapse happens in the US or Europe, will our Indian banks also fall along with them like a pack of cards? Is our hard-earned money, which is the only support we have and which is just enough for our daily food and medicines, will also be snatched from us? Don’t you think this is cruel on the part of the government, politicians, corporates, policy-makers, intellectuals and the media to allow these greedy bankers to silently, or ignorantly, mass murder millions of middle-class senior citizens and not give them a chance to even die in peace?
Moneylife and its team will receive huge blessings and good wishes from millions of helpless senior citizens for taking up this cause and bringing some solace to our elderly.
Omar SK, by email 
 
INDIANISATION OF JUDICIAL PROCESS NEEDED? 
This is with regard to “Private Bankers Are Public Servants, Decrees the SC” by Sucheta Dalal. This is yet another occasion when one feels proud of being part of the efforts that Moneylife makes to spread awareness about the implications of legal decisions affecting the financial sector. The judicial process and the law books passed on to us by the British have not, even after several decades of legislative action, undergone the kind of Indianisation needed to serve a growing economy like ours. 
If the common man has to benefit from the several provisions of law intended to protect his interests, there has to be more transparency and speed in judicial procedures. In most of the court cases affecting financial interests of citizens, the legal battle is between the citizen on the one side and government/corporate body on the other side. Governments and corporates can fight endlessly using public funds (yes, for me, the funds with corporates also come under the broad classification ‘public funds’). These result in prolonged litigation and, sometimes, even small issues reach the Supreme Court. 
The differentiation between the public sector and private sector banks for enforcement of laws like the Prevention of Corruption Act, by itself, does not stand to reason. Both categories of banks in India mobilise resource from the same source (public deposits) and do business in similar areas/sectors.
MG Warrier, online comment

 

MONEY THAT YOU CAN AFFORD TO LOSE?

This is with regard to “Why Savers Have Stayed Away from Stocks for Two Decades” by Sucheta Dalal. The question now is how will somebody convince investors that the stock market is a good place to grow one’s wealth? Most people ‘invest’ in insurance products because there are agents to lure them. An equity-investment culture can be created only if youngsters are financially educated. If that happens, the next generation will change things. It may now be difficult to convince older market-sceptics, especially those who may have lost money to scams and IPOs (initial public offers) that never did well.
Mohan Sivanand, online comment
 

NATURAL SEA-SALT IS NUTRITIOUS

This is with regard to “Salt Restriction Myth Busted” by Prof BM Hegde. Refined salt may be harmful but the best salt is natural, unrefined and unprocessed salt from the sea. It is a nutritious food. Among the many minerals that make sea-salt nutritious are: magnesium, manganese, boron, copper, silicon, iron and nickel. It has all the trace mineral elements that are naturally found in our blood.
Just take a cue; five decades ago did anyone have an issue of salt intake? The answer is No, because we used to ingest natural salt and sweetener like jaggery. The only issue is now to find good organic material at reasonable price.
Jayendra Pandya, online comment
 

WHICH ONE IS BETTER FOR A LAYMAN?

This is with regard to “Which Critical Illness Policy?” by Raj Pradhan. This is one of the better written articles on critical illness (CI) cover. Can you also suggest a flowchart to aid decision-making on which product type would be better for a layman?
Anurag, online comment

 

BLAME THE MINORITIES?

This is with regard to review of ‘The Turn of the Tortoise’ by Debashis Basu. As we are being reminded about this by the right-wing RSS, BJP and Shiv Sena, the lack of development can be blamed on the minorities. Once pure Hindutva is implemented, all these problems will be automatically solved.
J Pinto, online comment
 

ESSENCE OF GROWTH-INVESTING

This is with regard to “Buying Quality Vs Paying Less” by Debashis Basu. This is very well written. I have been investing in high-quality companies and nothing captures the essence of growth-investing as this article did. Growth-investing is a very tough field and has humbled quite a few people. But, on the flip side, you get to think like a businessman. I almost put myself in the promoter’s shoes when I think of the potential of the businesses.
Prashant Rishi 
 

MARK IT DOWN TO THEIR WHIM?

This is with regard to “Investing to Retire Comfortably” by Jason Monteiro. This is a well-written article. I think the problem is something else. Each government can come and change the taxation rules for this corpus whenever it wants. It is our money until we get our hands on it. In the US (and even in Europe), when Detroit’s local government goes bankrupt, the retirement/ pensions funds are ‘marked down’. My fear is that when India goes through a bad phase in future, the government would use these pension funds the way it uses LIC (Life Insurance Corporation of India) to save the stock market or worse mark-it-down-to-their-whim.
Aditya Kumar Pandey
 

UGLY ROLE OF OPPOSITION POLITICIANS

This is with regard to “I’m Back!” by Debashis Basu and Jason Monteiro. I wish the authors had mentioned the ugly role played by the Opposition politicians, i.e., the ‘dynasty slaves’, plus the new crook on the block and his coterie of Leftists, ably aided by their Left allies and Pak-leaning media. A large part of the blame should fall on these crooks who have just a one-point agenda: to pull down Narendra Modi and nothing else. They have failed to play the role of an intelligent, honest Opposition. And now it looks like the Opposition is willing to go anti-India desh ki barbaadi tak way to destroy Mr Modi. This reminds me of the joke: “Every woman needs a husband because you can’t blame everything on God or Modi.” The article does not have even a reference to any of these Opposition anti-nationals.  
Anand Vaidya

 

TOMORROW’S WINNERS?

This is with regard to “Wealth Creators 2005—2015” by Jason Monteiro and Pratibha Kamath. Great analysis, the past two decades were the turning point for our economy and it was because of the reforms in 1993. I doubt if there are any winners (for tomorrow) that are available cheap?
Sudharshan Katipally

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RBI Digs In Its Heels on Disclosure about Defaulters

Governor says it is not okay to disclose all wilful default data

 
The Reserve Bank of India (RBI) governor, Dr Raghuram Rajan, seems to have taken a stand on not disclosing information on wilful defaulters, despite a Supreme Court ruling on the issue. So far as we know, RBI has not filed a review petition or obtained a stay on the December 2015 judgement delivered by a bench of Justices MY Eqbal and C Nagappan in a matter pertaining to 11 cases pertaining to denial of information by RBI and others under the Right to Information (RTI) Act. 
 
However, on 5th April, during the interaction following the credit policy, Dr Rajan came out strongly against ‘indiscriminate naming of defaulters’. He is quoted as saying, “The act of default is sometimes not your fault—demand is weak, prices are low, dumping is going on, etc. So, there are a variety of reasons as to why a project gets stalled. Putting the promoter’s name up to say he defaulted, without giving the reason why, might not be right. We have no problem in publishing the wilful defaulter list—that is, where the promoter has, in the eyes of the bank, taken the bank for granted.” 
 
A little before the credit policy, an activist who had filed an RTI application, seeking information on the inspection reports as well as show-cause notices issued to the top four banks in India, received the standard rejection from the banking regulator saying that disclosure of the information would not be in the economic interest of the State and, hence, exempted under Section 8 (1)a and d of the RTI Act. It will be interesting to see how the Supreme Court reacts to 
Dr Rajan’s stand, if the petitioners take the issue to the court again.
 
However, the powerful All India Bank Employees Association (AIBEA) has come out strongly against the governor’s statement. On 6th April, CH Venkatachalam, AIBEA’s general secretary, wrote to Dr Rajan: “Mr Governor, we are of the strong view that in most of the cases involving the big-ticket defaulters, there is lethargy, leniency and accommodation but when it comes to the common man, our experience is different. At least what is sauce for the goose must be for the gander too.”
 
His letter said that AIBEA is aware that there could be some genuine reasons for loan defaults. However, when gross non-performing assets have risen alarmingly in the post-reform era from Rs39,250 crore in 1992-93 to Rs3,61,000 crore at the end of December 2015, “there seems to be some clear method in this madness of bulging bad loans.” Pointing out how industrialists remain rich and healthy even when their companies default, AIBEA asks Dr Rajan to make a beginning by publishing the names of 5,600 identified wilful defaulters who owe over Rs60,000 crore to banks. He also wants RBI to ask the government to ensure that such defaulters cannot hold public office. 
 
AIBEA has also thrown its weight behind individual borrowers who are harassed by recovery agents for credit card defaults; he writes about a person in Tamil Nadu being beaten up by the police, at the behest of a private bank, for failing to pay a tractor loan. It is pertinent to note that RBI’s consumer charter announced over a year ago has not been implemented yet by prescribing penalties for failure to treat consumers fairly. The wilful defaulter issue seems set to go back to the Supreme Court again.

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COMMENTS

Mohan Damodaran

8 months ago

On the one hand RBI as the regulator and watch dog miserably fails to check NPAs proliferation and on the top of it obstructs bringing transparency in the system to correct it.Once the system become transparent it will help separate the genuine cases from fraudsters which should be welcomed.Given this background people would like to know what is the accountability of RBI gov Mr Rajan individually in the entire NPA saga including those relating to Vijaya Mallya.

REPLY

MG Warrier

In Reply to Mohan Damodaran 8 months ago

Dear Mohan
Why restrict this demand only to RBI Governor? If someone is giving this information, let us know who are all accountable and the extent of their responsibility for rising NPAs and particularly in Mallya episode. May be when IIMs introduce it(KFA story) as a case study-I read there was a proposal- some interesting revelations will come.Let us wait and watch.

Anoop Chaudhary

8 months ago

Willful as well as non willful both lists should be made public and published.If this is done NPA problem will be solved. Keeping such list secret and confidential increases NPA. Real reason for not disclosing names of defaulters is that it includes names of ministers, their relatives and associates, political, industrialists having political patronage both from UPA and NDA with no difference.

B. Yerram Raju

8 months ago

But how come the SME defaulters' names are in the newspapers when they are snapped with notice after notice? Why the large defaulters suddenly gets this sympathetic treatment? Mallya-like accounts, though willful defaulters are tolerated for years together after their delinquency is known? Why the directors of those defaulting companies are shielded by both the banks and the government instead of putting them on notice?
Coming to Courts and settlements, BSR statistics show that barely 20% is recovered from all the legal processes - lok Adalats, DRTs, and under SAFRAESI. Cannot Supreme Court prescribe time limits for settlement of the cases as all the bank cases have proof of transactions? Yes; proof of actions both by the bank and the borrowers in all the cases take time. But how long?
BIFR - the Bureau of Industrial Funeral Rights, to put it euphemistically, is the most wasteful outfit with no accountability and allowed even after the related Act is annulled.

Satya

8 months ago

can we come to conclusion that regular and periodical inspections by bank auditors and RESERVE BANK OF INDIA failed in identifying all big defaulters including willful defaulters. Now it is time for RBI to put in place good audit from it's officials or independent CA firms about auditing for all loans above 1 crore, at the time of sanctioning, post sanction and initial stages of default smell. To make public all these at the initial stage itself. Ministry corporate affairs should ban those directors to start a new company and those are to be put in RBI list not to sanction any loans to the partners /directors and their relatives also.

Simple Indian

8 months ago

Instead of "protecting" defaulters, RBI ought to publish names of ALL defaulters who owe PSU Banks over Rs. 500 crores. The RBI needn't sit on value-judgements on the merits of the defaulters' reasons. Let the Courts and public at large decide whom n how much to believe. RBI's dogged refusal to divulge big defaulters' names despite SC's directions appears to protect these scoundrels. Common citizens who default on even a Rs. 9K loan EMI aren't spared by the Banks, but RBI and the Govt have allowed the likes of Vijay Mallya, who owe Rs 9000 crores to PSU Banks, to escape to UK to evade arrest and avoid jail term like Subroto Roy of Sahara. The entire govt and legal system seems skewed in favor of the rich and famous.

REPLY

Babubhai Vaghela

In Reply to Simple Indian 8 months ago

No Constitutionality Involved. Why #JokerJudgeTSThakur #ChiefJusticeOfIndia Handle this Matter? Let #NarendraModi Gang Handle it.

captainjohann

8 months ago

Why this American of Indian origin is so concerned about Indian Defaulters? What is the view of another American of Indian origin who is called Economic advisor to Government of India? Today we see TATA's have come to realized their bad economic decision to acquire Corus of UK and put it on block.They may loose some money on this. But they are not asking for write off by Indian tax payers unlike Mallayya? Have some some comments here state Indian big fat cats are shameless as one saw them standing in Q to have Darshan of american President Obama. Banks publish names of even small defaulters. I think list of all defaulters must be published by Banks Steel is being dumped, coal blocks are not being used. But then in Private sector one has to assess profit and loss and take descision. For example Adani wanted1 Billion dollar loan from SBI for coal blaocks in Australia and Modi took him in his private entourge to Australia. But SBI chief put her foot down and I think she saved not only Adani but also Indian taxpayers. RBI should be headed by an Indian.

REPLY

Babubhai Vaghela

In Reply to captainjohann 8 months ago

Please read "Bombay High Court : Ms Arundhati Bhattacharya Chairperson SBI - SBI AGM 2013 - Question No. 9 Furnish the names of Top Ten Defaulters of the loan and the amount involved". https://t.co/cE1Zvk2Njb and https://t.co/1VqURCM4nH

captainjohann

In Reply to Babubhai Vaghela 8 months ago

Sir, The link does not work in my old PC.Can you give just the gist of it.Thanks

Anoop Chaudhary

8 months ago

RBI has miserably failed in its functions,duties and responsibilities. It has failed not only in protecting interest of various stakeholders in banking system but also in protecting it own autonomy. RBI governor should protect autonomy of RBI. Disclosure of name of all defaulters willful or non willful is must for transparency and honesty in dealings.. There can be two separate lists, disclosure will lead to fast recovery and reduced NPA.

sunil

8 months ago

WHO WILL DECIDE WHO IS WILFULL DEFAULTER OR NOT?RBI HAS MISLED THE NATION AND SC BY HIDING ITS FAILURE TO CONTROL NOT ONLY PSU BANKS BUT THE MORE AMOUNT LOST BY COOPERATIVE BANKS ALSO.RBI SHOULD TAKE RESPONSIBILITY AND ACKNOWLEDGE ITS FAILURE AND COMMIT ITSELF WITHOUT FURTHER DEALY AND GUILT,THE DIFFICULT TASK OF PUNISHING THE MANAGEMENT AND FINANCIAL ADVISORS INVOLVED IN THE FRAUDS.

Gopalakrishnan T V

8 months ago

The fact remains that RBI is not micro managing things at banks' level. No doubt RBI has a statutory role to regulate and supervise banks in the interests of the economy and financial soundness.When ever the banks cross their limits in the grant of loans and the loan portfolios of banks go weak affecting the banks health , RBI takes stringent measures and advises banks to desist from such reckless grant of loans and keeps a close watch on such banks which are getting badly hit eroding the depositors money.It also ensures to issue strong regulatory prescriptions to ensure against deterioration of banks advances portfolio. No doubt RBI gives a long rope to even very badly run banks to correct themselves with directions, advice, moralsuation and penal measures etc. With all these, things are not changing and the banks position moves from bad to worse, RBI never fails to set right the bank and takes all measures under its command to protect the depositors interest. RBI as a regulator of banks has to ensure that the credibility of the banks does not get eroded affecting the finacial stability. Banks are run on trust and this trust RBI ensures to maintain to ensure that there is no risk for financial stability.Unfortunately in Indian Scenario we have two sets of banks ie Private sector and Public sector. While RBI has 100 % control on Private sector banks the same cannot be said to be true with Public sector banks which are owned and in a way managed by the Government in practice. This makes for the difference and RBI is answerable to the Government for everything.RBI is right in not disclosing all the deafulters because many default due to business failures because of political,economic technological and social reasons and displaying their names can cause undue damages to the whole system of Finance and its credibility causing ireparable consequences. No doubt core wilful defaulters can be made transparent but even here patience pays a lot and RBI' s approach is appreciable. It does not mean contempt of Court which in all Probability will appreciate its stance in the interests of the economy. RBI as an Institution has never failed to protect the interests of the Government, the economy, the people is a wordly acknowledged fact though some lapses here and there do occur for which more than RBI the government is responsible. Further, more than RBI, The Government has more information on all PSBs as they are owned by the government. RBIs' powers are getting stripped day by day is also a well known secret to all.

REPLY

D S Ranga Rao

In Reply to Gopalakrishnan T V 8 months ago

".....RBI is right in not disclosing all the defaulters because many default due to business failures because of political,economic technological and social reasons and displaying their names can cause undue damages to the whole system of Finance and its credibility causing irreparable consequences......" Do you mean to say that people are sitting ducks, willing to be robbed of their hard earned savings and expected to keep mum, deaf and blind for fear of "the whole system...and its credibility(still left, any?) causing irreparable consequences.."? Please put yourself in the shoes of those victims left high and dry by their trusted banks and then judge yourself.

Gopalakrishnan T V

In Reply to D S Ranga Rao 8 months ago

I have all concerns like any depositor,tax payer and as a citizen of this great country. Instead of answering your concern I request you to kindly refer to my detailed blog econo-reflexions.blogspot.com and the book on Management of Non Performing advances published by the Indian Institute of Banking and Finance. By publishing all names of defaulters nothing is going to be achieved . The defaulters are by nature shameless fellows and they do not care a foot buy such steps. Instead we have to see that the legal system and the general administration are really effective and deliver what is expected of them.

D S Ranga Rao

In Reply to Gopalakrishnan T V 8 months ago

Thank you for your concerns. "The defaulters are by nature shameless fellows and they do not care a foot buy such steps", and that's why our IMF-returned RBI Governor is on the back-foot to name them and Supreme Court is not wise enough to think so? Again, "Instead we have to see that the legal system and the general administration are really effective and deliver what is expected of them", but when? After the deluge? Thanks a lot, i have already read you; no more time to waste.

Sucheta Dalal

In Reply to Gopalakrishnan T V 8 months ago

Actually Mr Gopalkrishnan this is not true at all about cooperative banks.

There is shocking lethargy in what the RBI does and its disinterest.

its stringent actions often prevent the bank from functioning, but do not adequately support management to rebuild banks that are in a financial mess.

Depositors and shareholders pay the price with shocking regularity. Most people are too small to sue the regulators.

The story of Bombay Mercantile Cooperative Bank is one such -- RBI is negligent and disinterested in keeping the bank alive. Over 1300 employees jobs are also at stake!!


Gopalakrishnan T V

In Reply to Sucheta Dalal 8 months ago

Yes. As far as Cooperative banks are concerned you are 100% correct. Here again the dual Control on Cooperative banks by the State Governments and RBI makes both irresponsible and unaccountable. I strongly feel,RBI should come out of cooperative banks and hand over the same to NABARD.

B. Yerram Raju

In Reply to Gopalakrishnan T V 8 months ago

When there are systemic deficiencies, will mere transfer of responsibility from the RBI to NABARD remedy the situation? After all, NABARD is a refinance institution and not a regulatory body. Its performance of supervision and development has not been able to rescue the Rural Cooperative Credit System and has stymied the objectives of RRBs.

shailesh gandhi

8 months ago

The RBI has also given me a similar response which appears to be in contempt of the Supreme Court's order.

jaideep shirali

8 months ago

The RPF publishes photos of pickpockets saying that these are repeat offenders, please beware of them. Maybe Mr Suresh Prabhu should now ask these offenders whether they did it due to their compulsion or out of habit, before publishing these photos. The fact that somebody gets looted would be irrelevant. This is the argument that Mr Rajan is now defending. If the citizen is funding PSU banks, does he not have the right to find out who is looting them, in the first place? Spoken like a true babu, Mr Rajan. The public should pay up, but not ask questions why and for what reason, so that offences can repeat themselves without anybody getting caught.

ramdas naik

8 months ago

one rule for peter another for paul. Typical post colonial laws. In the age of hacking and cyber theft - is it so difficult to find out the defaulters ? When the Nationalised banks issue Ads for home, mortgage and business loan defaults under DRT act and publish photos and name them,one fails to understand why special treatment for industrialists.If RBI has no problem in publishing name of willful defaulters then let it start doing so. Atleast make a beginning

DEVI

8 months ago

why try to defend indefensible? extraordinary loyalty to RBI!
So far as acts are concerned your pension regulations do not provide for pension updation. Then why clamour for it.?
Who is supposed to keep track of defaulters in the banking system if not RBI. Then why protest M/o finance meddling with autonomy of RBI?
Regulators who keep closing eyes when subsidised interest rates are consumed in the name of growth and infrastructure development and NBFCs are allowed to flourish until scandals surface are bound to be questioned? Why defend falling institutions that have failed themselves.

REPLY

MG Warrier

In Reply to DEVI 8 months ago

Before you post this comment fourth time, let me respond. What is indefensible? My association with RBI is no secret, but how you have related the content of this article or my response to pension updation in RBI? When we discuss that, we will debate on it.This space is not for that as others are not interested. Other content of your comment which has no direct relevance to this article or my comment, noted for information, as you can have your personal views on how perfect the government and institutions are working in India.

DEVI

8 months ago

why try to defend indefensible? extraordinary loyalty to RBI!
So far as acts are concerned RBI and other Banks pension regulations do not provide for pension updation. Then why clamour for it.?
Who is supposed to keep track of defaulters in the banking system if not RBI. Then why protest M/o finance meddling with autonomy of RBI.
It is a fact that inspections of RBI are just like pilgrimage visits unmindful of the holy nexus between banks top officers, political masters, and lethargic follow up procedure followed by RBI and not only in case of bank and NBFCs.
Institutions that help in consuming subsidies in the name of growth and infrastructure are bound to fall sometime later, if not now.

MG Warrier

8 months ago

RBI is not expected to keep a defaulters’ list of the banks/financial institutions it regulates. Do not ask me to go back to the Supreme Court order asking the central bank to submit a list of a particular class of wilful bank defaulters in a particular manner by a particular date. That is a matter before the Apex Court and let us allow the court to do its duty. Let us not talk and act on behalf of judiciary.
Not just RBI, it is impossible for CAG to keep track of defaulters to central and state government departments and statutory bodies audited, for SEBI to compile on an ongoing basis list of companies which are not collecting their dues promptly or for that matter for any regulator/supervisor to do book-keeping for other organisations. RTI Act doesn’t expect such compilation of data.
Banking, like equity markets is sensitive to violation of trust and let us not destroy an institutional system which is still working well in India.

REPLY

DEVI

In Reply to MG Warrier 8 months ago

why try to defend indefensible? extraordinary loyalty to RBI!
So far as acts are concerned your pension regulations do not provide for pension updation. Then why clamour for it.?
Who is supposed to keep track of defaulters in the banking system if not RBI. Then why protest M/o finance meddling with autonomy of RBI?
Regulators who keep closing eyes when subsidised interest rates are consumed in the name of growth and infrastructure development and NBFCs are allowed to flourish until scandals surface are bound to be questioned? Why defend falling institutions that have failed themselves.

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