Citizens' Issues
Sushma Singh is the new Chief Information Commissioner

Information Commissioner Sushma Singh would take over as CIC from Deepak Sandhu later this month

Sushma Singh, the senior-most Information Commissioner, will be the next Chief Information Commissioner under the Right to Information (RTI) Act. She would succeed Deepak Sandhu, who completes her term later this month.


The decision on appointing Singh, a former officer from the Indian Administrative Services (IAS), as the next CIC was taken unanimously by a panel comprising Prime Minister Manmohan Singh, Leader of the Opposition in the Lok Sabha Sushma Swaraj and Law Minister Kapil Sibal.


Singh will be the second woman to become CIC after Sandhu, whose term comes to an end later this month.


Being the senior-most Information Commissioner, Singh was the unanimous choice for the post of CIC.


Sushma Singh became Information Commissioner on 23 September 2009, in the Central Information Commission. She had retired from the IAS on 31 May 2009.


She is a former Secretary to the Government of India and belongs to the Jharkhand cadre. She joined the IAS in 1972.


Singh has served as Secretary in the Ministry of Information and Broadcasting.


She has also served in the capacity of Secretary to the Government of India in the Ministry of Panchayati Raj and also in the Ministry for the Development of the North Eastern Region (DONER).



suresh dash

4 years ago

Welcome Sushama Singh madam as new chief Information Commissioner.

nagesh kini

4 years ago

Like the Supreme Court the Central Information Commission has proved to be above blemish.It has been manned by distinguished members who added value to their high offices.
In her unanimous choice we need to welcome and wish the new CIC all the best.

Identifying banks ‘too big to fail’: The RBI way

RBI's approach on too big to fail gives more weightage to factors such as securities issued and bought by banks in India and overlooking risky assets and growing NPAs of the lenders

The financial crisis that hit the world economy at the beginning of the year 2008 was an eye opener. It showed how fragile the entire financial system was and how systemic risks arising from weakness of financial institutions could easily spill over to the real sector. The crisis also highlighted the need to have a re-look at the financial institutions and monitor risks posed by these financial institutions. Many large financial institutions, which looked infallible before financial crises, failed during the crisis giving rise to the fear that such financial institutions require closer monitoring and could pose serious systemic threat in future. With the crisis in the background, the concept of, “too big to fail” gained significance. Though the term, “too big to fail” was used in earlier crises as well, it assumed significance post-2008 crisis. Federal Reserve Chair Ben Bernanke defined the term in 2010: "A too-big-to-fail firm is one whose size, complexity, interconnectedness, and critical functions are such that, should the firm go unexpectedly into liquidation, the rest of the financial system and the economy would face severe adverse consequences.”

Basel Committee on “too big to fail”:  Post financial crisis of 2008, the Basel Committee on Banking Supervision (BCBS), adopted a series of reforms to improve the resilience of banks and banking systems. In order to ensure that banking system has enough resilience, the committee started working on two key areas which included assessment methodology for globally systemically important bank and how these banks can develop additional loss absorption capacity.

BCSB came out with an indicator-based approach to identify systemically important banks. The selected indicators are chosen to reflect the different aspects of what generates negative externalities and makes a bank critical for the stability of the financial system. The advantage of the multiple indicator-based measurement approach is that it encompasses many dimensions of systemic importance, is relatively simple, and is more robust than currently available model-based measurement approaches and methodologies that only rely on a small set of indicators. The selected indicators reflect the size of banks, their inter-connectedness, the lack of readily available substitutes for the services they provide, their global (cross-jurisdictional) activity and their complexity.

As per Basel Committee’s indicator based measurement approach, 20% equal weightage has been given to five critical factors which are cross-jurisdictional activities, size, interconnectedness, substitutability and complexity which is explained in the chart below:


For each bank, the score for a particular indicator is calculated by dividing the individual bank amount by the aggregate amount summed across all banks in the sample for a given indicator.The score is then weighted by the indicator weighting within each category. Then, all the weighted scores are added. For example, the size indicator for a bank that accounts for 10% of the sample aggregate size variable will contribute 0.10 to the total score for the bank (as each of the five categories is normalised to a score of one). Similarly, a bank that accounts for 10% of aggregate cross-jurisdictional claims would receive a score of 0.05. Summing the scores for the 12 indicators gives the total score for the bank. The maximum possible total score (ie if there were only one bank in the world) is 5.

Additionally in order to find out this category of bank, BASEL approach says that banks need to be identified from list of 75 largest banks based on leverage ratio prescribed by Basel. Banks can be added in this list depending upon descretion used by national supervisor.

RBI approach on “too big to fail”: Based on the Basel approach, the Reserve Bank of India (RBI) has also decided to identify banks which are domestic systematically important. The RBI draft document says, “The banks will be selected for computation of systemic importance based on the analysis of their size (based on Basel III Leverage Ratio Exposure Measure) as a percentage of GDP. The banks having size as a percentage of GDP beyond, 2% will be selected in the sample of banks. As foreign banks in India have smaller balance sheet size, none of them would automatically get selected in the sample. However foreign banks are quite active in the derivatives market and so the specialised services provided by these banks might not be easily substituted by domestic banks. It is therefore appropriate to include a few large foreign banks also in the sample of banks to compute the systemic importance. The total assets of the banks selected for the sample would constitute 100% of the GDP. For this purpose, latest GDP figure released by Central Statistical Office, Government of India will be used”.

The broad comparison between RBI and Basel approach is given in the table below.

Source: RBI

While cross-jurisdictional activity is considered as a key factor for determining the risks posed by globally systemically important banks, for domestic banks size has been given a higher weightage by RBI. Cross jurisdictional activity has been given a weightage by RBI in sub-indicators and it has replaced level 3 assets by cross jurisdictional factors. RBI prescribes additional capital requirements for too big to fail to banks as follows:

Source: RBI

Apparently RBI’s approach on too big to fail gives more weightage to factors such as trading books of the banks in India. Under all three heads of interconnectedness, substitutability and complexity, the focus is more on market securities which include securities issued by the banks as well as securities which banks have purchased. The key aspect of core banking business is not explicitly mentioned. Banks in India in the current scenario face threat from rising non performing assets which pose threat to the banking operations. Risky assets in the books of most of the banks such as exposure to real estate sector or lending to various corporate also pose threat to the banking industry. The quality of assets of a bank should definitely be a key criteria in identifying too big to fail status. Also, with banks in India spreading wings across world, cross-jurisdictional liability should have been given a higher weightage.



Dayananda Kamath k

4 years ago

all of them have already failed and have become big to be managed it might be priortising whome to be saved. the new bankin licences is necesitated because the existing banks can not be resurrected due to mis managemnt by regulator, finance ministry.

MG Warrier

4 years ago

The introductory paragraph of the December 2, 2013 RBI release on the subject reads asunder:
“A few banks assume systemic importance due to their size, cross-jurisdictional activities, complexity, lack of substitutability and interconnectedness. The disorderly failure of these banks has the propensity to cause significant disruption to the essential services provided by the banking system, and in turn, to the overall economic activity. These banks are considered Systemically Important Banks (SIBs) as their continued functioning is critical for the uninterrupted availability of essential banking services to the real economy.”
The cut and paste approach to policy formulation which impaired the finance ministry’s policy apparatus is, perhaps slowly, affecting the RBI also. The entire approach has been borrowed from the ‘international’ context. Failure of insitutons, big or small, affect the stakeholders. Remember the famous conclusion of All India Rural Credit Survey Committee of the 1950’s: “Cooperation has failed. But cooperation must succeed”
The sporadic releases of policy approaches on banking policy in different context send out blurred signals which get interpreted by stakeholders based on their constituency interests. The central bank should, on its own, take up a serious study of the structural and policy issues affecting the financial sector.

Auto sales in November weaker than expected across segments

During November, all automakers reported weaker-than-expected numbers due to soft demand

Indian auto industry witnessed weaker sales during November across the segments. While passenger car and medium and heavy commercial vehicles (MHCV) volumes declined tractor sales were the only exception where growth was higher than expected. Two-wheeler volumes increased mainly due to 43% higher sales reported by Honda Motorcycle and Scooter India, Pvt Ltd (HMSI).


Nomura feels if the current trend continues, there may be downside risks to its FY14 volume estimates for Bajaj Auto Ltd and commercial vehicles (CVs) Ashok Leyland and Tata Motors. "There could be some upside risks to our volume estimates for Hero MotoCorp Ltd (HMCL)," it said in a research note.

During November the demand subdued, however lower commodity prices are positive for profitability of automakers, Nomura said.


The note says, "As per our discussion with the companies, demand is soft post the festival season. Discounts came down marginally in the October-November period but can inch up higher in December. However, companies sounded more positive on profitability as commodity prices have come down and thus recent price increases should lead to better margins, we believe."


During the month, car industry volumes declined 7%, while two-wheeler volumes increased 6-7%. Nomura said, "HMSI reported a strong set of numbers (up 43%), led by robust growth in both bike and scooter segments. HMCL’s volumes increased by about 6%, below Nomura’s expectations of around 10% growth. Bajaj Auto saw a 29% decline in domestic motorcycle volumes compared to our expectations of 12% decline. As per the company, this was partly due to run-down of inventory and lower production of newly launched Discover 100M. TVS saw 10% decline in domestic two-wheeler volumes while Yamaha’s volumes increased by about 7%."


According to Nomura, overall MHCV industry volumes weakened further in November. "Volumes declined by about 35%, much below our expectations of 15% decline. Volumes for Tata Motors declined, by about 28%, while Ashok Leyland saw a 40% decline in MHCV volumes. Eicher’s total CV volumes fell by 44%," the report said.




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