A Case for Corporate Ownership of Banks
The question of permitting Non-Financial Corporates (NFCs) into banking is well debated. While the jury is still out, the bias is clearly towards ‘NFC ownership of Banks is bad’. However the existing template of bank licensing that excludes NFCs’, is not without loopholes either. The moot points, therefore, are – does NFC ownership significantly increase the existing risks? and, can the risks be mitigated? In this article, we probe these questions, making a case for having NFC owned banks
Banking on SPAM?
In a recent survey we found 86% of participants reported Banks and FIs to be the biggest spammers. Banks need to realise that every interaction with customers, existing or potential, is a moment of truth. Pestering only leads to increased trust deficit as the customer starts to see an ‘aggressive marketer’ and not a ‘trusted partner’
Loan Agreements: A contract between unequals!
Bank Loan agreement had been written ages ago. There are innumerable archaic clauses that may be unjustifiably invoked, without assigning any reasons under the guise of ‘early warning signals’. This creates a trust deficit. Sumit Kakkar recommends the need to relook at these.
RBI empowers CRO office: Endeavour to make NBFCs bullet proof!
In a recent circular RBI has made a high decibel statement about the CRO’s independence and has put a lot of onus on the boards of NBFCs. Importantly, CRO office cannot be subordinated to any other department. But has the regulator stopped a tad short of empowering the position enough? Sumit Kakkar evaluates
The Case of Central Bank Digital Currency (CBDC)
There is a good case for Central Bank Digital Currency (CBDC) in today’s world, but at the same time we cannot brush aside concerns on architecture, infrastructure, and rules of access to CBDCs. Debjyoti Mukherjee explains the concept and its pros and cons.
How are ‘Global Systemically Important Banks’ (G-SIB) monitored under BASEL
Failure of a Systemically Important Bank amplifies the impact on world economy for two reasons. Firstly, banking services in many countries rely heavily on these banks. Secondly, it shakes customer confidence in banks which may trigger a contagion effect. How are such #TooBigToFail banks identified and monitored under current BASEL norms? Amit Balooni provides a quick overview of the process and its disadvantages
Helicopter Money as a Monetary Policy tool : Benefit and Risks
Helicopter Money is a monetary policy concept proposed by economist Milton Freidman to overcome the liquidity and rate transmission challenges. However like everything else in policy making, there are no free lunches. Himanshu Mehra explains the concept and its risks.
RBI IWG Report: Assumptions As Tenuous As Recommendations?
The recent report by Internal Working Group (IWG) of RBI has made recommendations that run contrary to the practice followed in internationally, especially the recommendation to would allow industrial groups to own banks. Predictably, the report has been controversial. However, lost in the noise is a set of implicit assumptions that the IWG seems to have made, that further weaken its contentions. Nishikant Das assesses these assumptions.
Way Forward for Banks: Conservatism, Capital and Risk taking
From knee jerk reactions to nudge of regulators through MSME guarantee scheme to TLTRO to capital raise, Banks have gone through the COVID learning curve. Time to start a balanced risk taking approach? Sumit Kakkar assesses the current state
Decriminalisation of Cheque Bounces : Pros and Cons
In order to improve ease of doing business in India, Ministry of Finance issued a notification inviting suggestions on decriminalisation of around 39 sections which contain minor offences under 19 different Acts, including decriminalising Cheque bounces under NI Act . Vimee Shharma evaluates the pros and cons