Loading...

Follow The Big Picture on Feedspot

Continue with Google
Continue with Facebook
or

Valid
Not a week passes by without some bank in being embroiled in some violation or scam. This happens in many economies and it happens to well-known banks as well as obscure banks. Banks seem prone to mischief. Their mischief often creates huge problems for the economy at large. How we do address banks' propensity to land in trouble. See my article today Banking's toxic culture.
Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 
Don't miss the terrific two part article on the subject by former RBI Governor Y V Reddy (for once wielding his pen on a political subject). The first part's here and the second part here.

What are some of the arguments made for simultaneous polls. Here's a partial list:

i. The model code of conduct comes in the way of government enacting policies at election time and results in policy paralysis

ii. It's costly to have separate polls

iii. Economic growth suffers because of frequent elections


Reddy demolishes every one of these. If the model code of conduct is a problem, let's modify it suitably. Let governments go ahead and announce polls at election time but let the EC have a panel of independent experts pronounce on these for the benefit of the public.

Costly? Reddy shows that the government expenditure on elections is trivial..

Economic growth has had little to do with frequency of elections or rule by a government by a majority or a coalition government.

So why are the major political parties pushing for it? Data indicates simultaneous polls may work to the advantage of national parties and to the detriment of regional parties.

Simultaneous elections seems intuitively appealing. They provide stability for five years. But this could well come at the cost of greater accountability. It's not enough if the electorate expresses itself once in five years. Periodic voting in states provides valuable feedback to the government at the centre. Reddy quotes B R Ambedkar as saying that responsibility must be preferred to stability. He thinks simultaneous elections could spell the opposte: stability prevailing over responsibility.

Reddy points out that our greatest achievement is making the federal system work. The present proposal could undermine that achievement.
Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 
The Big Picture by The Big Picture - 1y ago
US defense secretary James Mattis greets newly appointed National Security Advisor John Bolton with the words, "“I’ve heard that you’re actually the devil incarnate and I wanted to meet you.”

Bolton is a hawk on security matters- he favours a strike on North Korea and regime change in Iran. Mattis (known during his days in the army as "Mad dog Mattis") has been a sober influence in the Trump regime.  How Trump will manage two remains a mystery.
Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 
The Big Picture by The Big Picture - 1y ago
The ET report that the RBI has advised the board of Axis Bank to reconsider the three-year appointment it had given to its MD Shikha Sharma has created quite a buzz.The report suggests that the RBI would like the board to limit her re-appointment to one year during which period the board could look for a successor.

It's not unusual for the RBI to give directions to private bank boards but this typically happens where the banks are in deep trouble or there is grave misdemeanour. Axis Bank has had its share of NPA woes but it cannot, at this point, be said to fall in either category- unless the RBI has information that is not yet in the  public domain.

Axis Bank's performance has come in for scathing criticism. For instance, Bloomberg columnist Andy Mukherjee wrote in October 2017:

Sharma, who came to the bank as CEO in 2009, has overseen shareholder returns of 252%, less than the country’s Bankex index at 270%. On her watch, $250 million of bad loans has swelled to more than $4 billion, even as total assets merely tripled. Now, after the September quarter, annualized credit costs have ballooned to 3.16%. That includes a 1.42 percentage point bump due to the $250 million provision management had to make after the central bank caught its lie. As for that full-year credit-cost guidance, which the CFO was planning to lower in July, it’s now been raised to between 2.2% and 2.6%.

In 2017, when her term was renewed for a further three years from 2018 onwards (when it was due to expire), Sharma had already served as MD for eight years. Extending her term until 2021 would have meant that she would serve as MD for 12 years. That's too long for the CEO of a bank and it must happen only in the rarest cases. You need extraordinary performance to justify something like that. Otherwise, a ten-year term is the most one can think for a CEO in banking (or, perhaps, a CEO in any sector).

Sharma's performance, as we have seen, was quite ordinary. The RBI must, in its annual financial inspection, ask the Axis Bank board to explain what criteria it used for Sharma's appointment for yet another term. Was it the absence of an obvious successor? If so, it represents a failure on the part of the Board. It does not help matters that rumours have been swirling around that the Deputy MD of Axis Bank and the head of its Corporate Banking have tendered their resignations. If true, Sharma will have to leave in a year's time (going by the ET report) and there's no successor in sight.
So much for governance in private sector banks.
Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 
Yes, the contest has been closer than in 2012. Nevertheless, the BJP's win in Gujarat is remarkable. It comes after 22 years of BJP rule and it happened inspite of the BJP's willingness to steer clear of  assured vote-catchers such as farm loan waiver and quotas for particular groups, both of which the Congress resorted to.

There were reasons for the electorate in Gujarat to be unhappy- farmers, MSMEs, youth and others are unhappy with economic conditions. Nevertheless, they did not think it necessary to disturb the status quo. Gujarat has seen economic progress and the absence of caste and communal strife for over 15 years now, and voters seem to have judged that it's not wise to disturb this state of affairs.

More in my BS column: Gujarat and BJP: why discontent did not spell defeat
Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Separate tags by commas
To access this feature, please upgrade your account.
Start your free month
Free Preview