The other face of Private Banking C.P. Chandrasekhar and Jayati Ghosh

Private banks, especially foreign ones have relied on off-balance sheet liabilities to earn revenues and profits, courting risk and leaving the business of banking proper largely to the public sector banks. Other_Face_Private_Banking  (Download the full text in PDF format) (This article was originally published in the Business Line on January 15, 2018)      

The Demise of Bank Credit C.P. Chandrasekhar and Jayati Ghosh

Growing economies generally show increasing deployment of bank credit – but in India this has been decreasing for years and recently has been almost flat. What does this suggest about the growth process and the health of the Indian economy. Bank_Credit  (Download the full text in PDF format) (This article was originally posted in the Business Line on 1 January 2018.)

Create a Crisis and make it Worse C. P. Chandrasekhar

On August 10, the government tabled a new bill in Parliament, with the aim of using its majority to push through a desperate policy initiative in the form of the Financial Resolution and Deposit Insurance (FRDI) Act. The Act seeks to create an ostensibly ‘independent’ FRDI Corporation, which would take over the task of resolution of failing financial firms from the Reserve Bank of India and other regulators. To that end, it is to be armed with special and near draconian powers to implement its mandate, and given control of the deposit insurance framework currently managed by the Deposit Insurance…

NPAs: All talk and no action C. P. Chandrasekhar

The media are full of it. Viral Acharya, a recently inducted Deputy Governor of the Reserve Bank of India (RBI), has declared publicly that resolving the problem of bank stress resulting from large non-performing assets (NPAs) on their balance sheets is the RBI’s priority, taking precedence over measures such as interest rate reduction to spur growth. The issue here is not just one of preventing bank insolvency, but of keeping the credit pipe open. Banks burdened with NPAs are likely to be less willing to expand their loan books, and if interest rates are too low, banks may be unwilling…

Redistributing Regulatory Power C.P. Chandrasekhar

In March this year, two years after its constitution, the Financial Sector Legislative Reforms Commission (FSLRC, chaired by Justice B. N. Srikrishna) submitted its two-volume report. While the Commission’s title seems limited in terms of remit, its report is indeed far-reaching. Exploiting the rather wide and ambiguous terms of reference set for it, the Commission has chosen not to restrict itself to merely recommending amendments to existing legislation and the enactment of marginal new laws to modify the historically evolved legal framework. Such an exercise is indeed necessary to excise redundancies, address conflicting mandates, close gaps and accommodate new features…

Reflections on the Production, Management and Measurement of (Primarily Financial) Risk Andrew Cornford

In this article, the author discusses the evolution of prediction and of the control and measurement of risk with the aim of providing a historical perspective on regulation and risk management for today's financial sector. The paper includes concluding observations on the way in which changes in risk management have had effects on financial firms and those who work for them with implications for ethical dimensions of their performance. reflections (Download the full text in PDF format)

New Zealand gets its own ” People’s Bank “

Kiwibank, a new bank for people wanting to go back to a simpler way of banking in New Zealand, began a nationwide rollout on March 23. The country's only public bank, it is also the only New Zealand-owned bank since 1989 when the last of the four government-owned banks, the PostBank, was privatised. Few countries sold and deregulated public utilities and services faster than New Zealand under successive Conservative governments in the 1980s and 1990s. Now under a Labour-Alliance coalition government, the public sector is making a come back in banking, electricity, telecommunications and transport. Kiwibank is the brainchild of…