Banking Licenses to Corporate May be a Bad Idea

As per the suggestions of the Internal Working Group of the Reserve Bank of India, the big business groups may be allowed to promote banks in India. The government must consult experts and follow due diligence before it takes the final decision as this decision may cut deeply than the benefits.

It is certain that the entry of big business houses in the banking sector's will increase the lending capacity of the banking sector as whole and accelerate the development of financial services and its penetration but at the same time the risk in the banking sector will surely increase substantially. It is quite possible that this single decision may jeopardize the whole banking sector in particular and the economy in general.

The Risk of Banking Licences to Big Business Houses

An internal working group of the Reserve Bank of India has suggested that large business groups including NBFC (with an asset size of ₹ 50,000 crores or more) should be allowed to promote banks in India. The reasons for such a suggestion has been cited as international practices and possible ‘management expertise, and strategic direction’ that these groups may bring into the banking sector. For a capital starved economy like India, it may prove to be a good decision to bring in more capital (which economy needs at this point of time post COVID havoc). However for four decades (last round of nationalization of banks in 1980), business groups haven’t been allowed to promote banks in India. Such a sweeping decision by the RBI would be revolutionary as it has earned a distinction of an extremely cautious and conservative banking sector regulator!

Lakshmi Vilas Bank and DBS Bank India Merger

Lakshmi Vilas Bank has been facing problems for more than three years. The financial position of the bank had undergone a steady decline in the last three years.The losses have been increasing. Non-performing assets (NPAs) and provisions have been increasing with gross NPA of ₹4,233.31 crores and ₹16,622 crores of advances and ₹20,973 crores of deposits at the end of September 2020 quarter. As a result the networth of the bank has been eroding. The tier I capital has slipped into negative to -0.88% and capital adequacy ratio has fallen to 1.12%.

Atma Nirbhar Bharat Abhiyan 3.0

Indian economy before the pandemic induced shock was already under stress. The economic activities were de-accelerating and the financial sector was struggling to get back into the shape. The previous doses of stimulus have helped the supply and demand side of the economy to a huge extent. As a result there is growth in the economic activities across all the spectrums. Different indicators such as e-way bills, PMI and credit growth are improving.

Modelling Stock Returns in India: Fama and French Revisited

Since reforms, Indian security market has gone through significant changes and as result the efficiency of many models developed earlier might have been affected. The same may be true with three factors CAPM. This study aims to test the validity of three factors CAPM model proposed by Fama and French (1993) in changed Indian context. For the study, assessment period is 1999-2013 and BSE-500 has been taken as proxy for market. Results show that in Indian market, no size effect and a weak value effect exists but size or value of stocks cannot discriminate stocks robustly. Beta is significant and none of the three factors alone can explain the variations in the expected return but two or three factors together can explain to some degree. The ability of three factors CAPM in explaining the expected return increases during low GDP growth period and falls during high GDP growth period.

Read More

Reservation in Private Sector Jobs: A New Malaise in Making

Over decades it has been witnessed across the world that the governments have tendencies to resort to protectionism when things at domestic level get tough and their economic policies fail to perform. The protectionist tendencies of the central governments of the nation are often found to transact to the states to inspire them to indulge in such protectionist practices ignoring the fact that such practices in domestic markets often have only emotional outrage than any empirical evidence of bringing in any substantial benefits.

The empirical evidences suggest that protectionism often leads to inefficiencies in economies. However, to some extent, the limited protectionist approach to the economic responses at national level against import and dumping has quite a different dynamics due to heterogeneous global market conditions than such protectionist practices in domestic (homogeneous) markets.

Impact of Globalization on Distribution of Income, Poverty and Inequality in India

This paper uses qualitative analysis for assessing the impact of the globalization on distribution of income, poverty and inequality in India and arrives as different conclusions. It has been concluded that the absolute poverty in India with the increasing globalization has fallen significantly by at the same time inequity has increased. To measure globalization KOF Index has been used and for inequality Gini Index has been used.

Read More

The Assault on Arnab Goswami and the Freedom of Press

The tone and vendetta journalism of Arnab Goswami can never be appreciated in any way. His activism in the name of journalism in cases of Sushant Singh suicide, Kangana Ranaut, Rhea Chakraborty as well as the personal attacks on different politicians and personalities than asking uncomfortable questions using the platform of a TV channel was uncalled for. However in the heightened emotions of political hue and cry, this hooglism seemed justified to millions of Indians who enjoyed it but at their own deadly cost (to be paid in future)!

An Absurd Comparison between India and Bangladesh

Post the World Economic Outlook Report by the International Monetary Fund (IMF), there has been an absurd comparison between India and Bangladesh. This comparison is highlighting that the per capita GDP of Bangladesh will overtake India’s per capita GDP this year. However, in this politically hot discussion many important and vital issues mentioned in the same report, remain in background which have far higher impact on the economic future of India.

Socio-Cultural Impact of Globalization in India

This paper is analysing and summarising the impact of globalisation on social and cultural values of India. For this, a number of research papers have been reviewed, presented and corroborated in this paper. In this paper social and cultural issues like gender inequality, equal opportunities, family structure and values, social security net, life style, administration, education, technology, healthcare system, festivals, language, music, literature, cinema, television and drugs and trafficking been discussed on the basis of prior research works. The findings from those works have been summarized and presented in this paper.

Read More