Pandit Madan Mohan Malaviya, the patriot, educationist, statesman, orator, lawyer, journalist, social reformer and an unparalleled institution maker was born in a family of great luminaries and materially indifferent parents at Prayag (Allahabad)on December 25, 1861.
His forefathers were originally hailing from the Malwa region and known for scholastic leanings, they moved to Allahabad in late 15th century to escape the atrocious treatment of contemporary Muslim rulers. Allahabad turned out to be their home and locale of learning pursuits. Malviya, also known as Mahamana was born in a modest locality then known as Diggi (now Malaviya Nagar) in a small house in Kucha. Sanwaldas of the Syrakund or Lal Malaviya Jee was the fifth of the eight children of Pandit Brajnath and Moona Devi.
His father, a great Sanskrit scholar wrote a remarkable book titled 'Siddhant-Darpana', an exposition of the Bhakti or devotion - the book was published in the year 1906, by his worthy son from Abhudya press. Because of no material leaning, the family circumstances didn’t permit Pandit Brajnath to provide higher education to his children but the case of Malaviya went in a different positive direction, as the great man was steadfast to sail against the tides.
After his basic education at home, he admitted to free Haradeva Guruki Pathsala under the great disciplinarian, Haradevji. There, he learned the intricacies of life and how to cope with the challenges. Further, he enrolled to another school, run by Vidya Vardhini Sabha. At this institution, he came closer to some young scholars like Pandit Devaki Nandan - and developed a taste for public life and knowledge.
He matriculated from the Allahabad Zila School, then the exam was conducted by the Calcutta University in that region. Apart from being an avid learner and extraordinary student, Malaviya was equally passionate for music and sports. He had masterly command over traditional music instruments like, flute, sitar. With music as well, he inherited a lot from his father - and brother, Jai Krishna - a distinguished Sitar player of his time.
Malviya laid stress on the significance of good health which according to him was essential for public spirit and consistency in life. In adolescence, he sensed his duty for the motherland and started shaping his life as per the requirements which made him ready for independence struggle and anti-communal activities.
His commitment for higher education brought him to prestigious Muir Central College (then housed at Darbhanga Castle. Soon, his principled and meritorious capabilities drawn the attention of school's visionary principle, Mr. H.Harison. He took special care of young Malaviya and remained gracious even after a grand reception led by Malviya against the will of British Raj, for Lord Ripon, a kind man for India.
In 1881, he married with Kundan Devi of Mirzapur. By that time, he was eighteen year old and was an undergraduate at the Muir Central College, Allahabad. In 1884, he awarded with B.A from Calcutta University. Three years later, the city of Allahabad had its first University which was born out from Muir College. At later phases, Allahabad University epitomized the anglicized education in eastern India.
It’s hardly a well known fact that his surname 'Malaviya' was broken from his forefathers' surname 'Malai'. He in fact made his surname 'Malviya' on his own. After completion of university education, he took a modest job of school teacher. Subsequently, he founded in December 1889, a remarkable public institution Bharati Bhawan Library - and built a hostel for outstation students in Allahabad University during that phase.
This man in Chaugoshia (turban) shot to high fame in the Indian National Congress's Calcutta session of 1896. Raja Rampal Singh of Kalankankar offered him to edit a Hindi daily Hindustan, which he accepted with some conditions. He brought effective changes for heralding for culture of Hindi press and freedom of press at large.
The mission was quite tough, but for a man on mission for motherland's independence like Malaviya - it was doable. He raised the tone of resistance against the colonial suppression, with a fine show of journalism and civil activism. Abhudaya was another publication under his editorship that radicalized freedom movement in that terrain. This publication was finally converted into a daily in 1915, with the support of Purushottam Das Tandon and Pandit Krishnakant.
His zeal for academics persisted even after his University education and that encouraged him to get a degree in law in 1891. He joined the Bar at Allahabad High Court, besides doing a job of Assistant Editor at The Indian Opinion. Even in midst of such time-consuming engagements, he always managed time to think for his dream institution which he had been shaping inside his mind and heart.
Malaviya was an incorrigible multi-tasker, so as next move for motherland’s liberty - he played a formidable role in establishing an English daily The Leader(1909). For better grouping of nationalists, he persuaded Sir Tej Bahadur Sapru to settle in Allahabad. Moreover, the presence of Sir Sundar Lal, Pandit Motilal Nehru and Mr.Chaudhury kept him in action for the great causes he stood with.Indeed, the period was most memorable from a point of view of Allahabad’s high stake in academic and other significant matters.
He equally volunteered for the cause of Hindi and other public initiatives, including Kashi Nagri Prachirini Sabha. These efforts were crucial and pertinent from the sake of 'identity revival' among the masses. His apperance as a lawyer was very impressive which he had shown on crucial occasions. Among other immensely important cases his took for national causes were for Chauri Chaura incident, Round Table Conference in 1932 and for Bhagat Singh, Sukhdev and Rajguru in Parliament bombing case.
Lord Curzon, then the Viceroy was greatly alarmed by the proliferation of nationalist activities inside the academic circle, and appointed an Indian Universities commission in 1904 to probe into the working of Indian Universities. All the Universities were brought directly under government control. Lord Curzon, by this act, again left a reason for mass-scale dissatisfaction and discontents.
This errant move of British rule couldn’t stop Malviya to think further for Kashi Hindu Vishwavidlaya or Banaras Hindu University.In 1904, he hold a resolution for establishing a Hindu University at Kashi under the presidentship of the Maharaja of Banaras. For that matter, he received first token donation of fifty-one rupees for the University from his father.
Debate over the University grew more during Banaras session of Indian National Congress held on December 31, 1905, Banaras. This took place at the Town Hall, under the presidentship of Shri B.N.Mahajani. The scheme of the Hindu University was placed before the representatives of all religious and renowned educationists. With such positive development, the public announcement of Banaras Hindu University was finally enunciated on January 1,1906.
The other contemporary moves boosted confidence in Mahamana - and the Central Hindu College, after witnessing a great success under the visionary leadership of Annie Besant, applied for statuary Royal Charter for the establishment of a 'University of India' under the signatures of influential personalities. The Bharat Dharma Mahamandal of Kashi under the presidentship of the Maharaja of Darbhanga, had simultaneously launched a scheme for the establishment of a Sanatan Dharma University.
In the year 1911, the Maharaja of Darbhanga along with Annie Besant incorporated his scheme with that of the Hindu University - he personally too took great interest and met Lord Harding (then the serving Governor General) with plan of University and received his consent. However, the Education Secretary Harcourt Buttler became alarmed to see the prominence of Hindi in proposed University, he gave mandate for English, as the medium of education in Banaras Hindu University that for time being accepted by Mahamana.
Malaviya had vision to see the future changes and their imminent effects. So, he had shown flexibility on his earlier plan to use mother tongue as medium of instruction at B.H.U. Finally the dream came true on the Vasant Panchami day, February 4, 1916 - and foundation stone of Banaras Hindu University was laid by Lord Harding in the presence of august gathering and thousands of city dwellers.
Although, Malaviya's compulsions were well understood but the conferment of Doctorate of Letters to Prince of Wales on December 13, 1921 was an unusual decision that was critically seen within the political and academic circle. Albeit, he stood on his reason as he thought universalization of education, is a key factor for human development.
His convictions were universalist at times. Soon, B.H.U was shifted from its Kamaccha Campus to the new (existing) campus at Nagwa Ghat. He spent considerable time in the capacity of University's Vice Canceller. In 1938, he resigned from the post of VC and continued as its Rector till his death on Nov 12, 1946. It was a good fortune of this university that it was served in early phases by a numbers of distinguished scholars and benign human beings, likes of Dr. Amarnath Jha, Dr. Radhakrishnan, Pandit Govind Malaviya, Acharaya Narendra Deo, Dr. C.P.Ramaswamy Aiyer.
For making his dream coming true, Malaviya intertwined with privations and never took even a pittance from the University and remained concerned for its further development in different domain. For the size of University, he founded and maintained throughout his life, could become possible only through preserving best human values in its administration. He faced several incidences of insults from cynical feudal heads, but a graceful Malaviya had always maintained his stature and conquered those narrow irritants with his pragmatic actions.
While remaining absorbed in University's works, he remained equally focussed on independence movement and created an interface between these two in manner where the newly founded University became the centre of pro-independence activities. Malaviya did justice to the diverse roles he played, including of being top brass in Indian National Congress through his unparalleled will and sacrifice on family front.
While he was an epoch-maker, he was always surrounded with the tragedies, right up from the loss of his siblings at young ages to the accidental death of his supportive wife. He had four sons and three daughters - they followed the father's great path but only Pandit Govind Malaviya could touch the level of fame which one could expect from a worthy descendant of Mahamana.
Right up to the day of foundation to now, the University of Mahamana has always played a formidable role in strengthening of the national causes. Its culture is blended with both modernity and tradition. The ethics and humanity stay on course here along with the pastime for high standard education in 'Guru-Shishya' tradition.
Many changes have taken place inside the University and its reputation as 'Center of Excellence' has expanded to all major streams. Its old hostels and few old nameplates like, 'College of Arts', 'Bharati Mahavidyalaya', 'Mahila Mahavidyalaya' and others are suddenly give a chance to roam in down memory lane.
Mahamana through his great humane value never let disoriented the middle nomenclature of the university and truly succeeded to establish an unparalleled institution. As an alumni of Mahamana’s great institution, I have reasons to look back on my own time spent there and the life-long bond that I have with my Alma Mater. The Kulgeet of the University says best about it "Madhur manohar ativ sundar, ye hai sarva vidya ki rajdhani."
Atul K Thakur
April 27,2010
summertickets@gmail.com
Friday, April 30, 2010
Immeasurable Poverty
The debate on the extent of poverty in India has been a matter of global interest in the recent years since the position of emerging India is matter of great concern in the today’s era of global trade convergence. Though in the wake of economic reforms, poverty estimation itself emerged as a challenge which making this crucial matter more complex and distant from actuality.
In India, poverty estimation is primarily carrying by fixing a poverty line based on a differentiated calorie-norm; this approach has been developed as a custom over the years since its prioritization by a task force of the Planning Commission in 1979 that defined the poverty line as on per capita expenditure at which the average per capita-per day calorie intake was 2400 calories in rural areas and 2100 calories in urban areas.
Unfortunately, this method remains instrumental as authentic tool of poverty estimation which work on average per capita expenditure incurred by that population group in each state which consumed these quantities of calories-the 1973-74 survey of NSSO had taken it into account as the poverty lines. Based on the observed consumer behavior in 1973-74, the poverty lines at Rs49.09 per capita per month in the rural areas and Rs56.64 per capita per month in urban areas-these poverty lines were updated over the years by simply accounting for changes in Consumer Price Indices {CPI}, thus the all-India poverty lines updated for 2004-05 were Rs356.30 in rural areas and Rs538.60 in urban areas, per capita per month.
That faulty standard explicitly revealed the government’s inflexible mindset on policy intervention which always rely on the collective generalizations as major tool-regardless of what the Planning Commission comes up with, the empowered ministers remained stick to their prefixed line.
In such stodgy working method, two most important determinants of poverty;Purchasing Power Parity {PPP} and deprivation remains excluded at the cost of calorie, that itself creates lot of perplexity in true judgment of poverty. Absence of universalization of social security schemes and access of all BPL families to Public Distribution System {PDS} further engraving the situation; based on urban line of poverty measurement, total number of poors in India have risen from about 403 million in 1993-94 to about 407 million in 2004-05.
Wrong exclusion of around 77% of population living merely on R16/day {National Commission on Enterprise in Unorganized Sector, 2004-05} is making India’s performance pathetic on the Global Hunger Indexes-surveys of multilateral agencies like UN and IFPRI demonstrate the actuality through its Human Development Reports.
There are many impediments are haunting on the way of poverty alleviation but its measurement is most daunting one among them which keep teasing to targeted efforts-asymmetry could be understand through these figures, National Sample Survey’s {2004-05} poverty rate compilation showed the variance on poverty level among nodal agencies, as per Planning Commission {27.5%}, NCEUS {77%}, Suresh Tendulkar Committee {37.2%}, Rural Development Ministry’s {50%}-on which data ones should rely? After a long slumbering, government and Planning Commission have accepted the report of Suresh Tendulkar whose projection on poverty rate is much higher than earlier contemplation of government.
The gross failure of government’s standing shows that, act is more important than preaching on the issue of hunger and poverty estimation. There is need to extend the stake to these 77% population of country who are dwelling with low access of food, sanitation, finance, education etc.
By providing entitlement of basic necessities to these marginalized section, government can ensure the equitable growth which is very essential in the size of country we have-alienation of such size is in no manner a feasible option before the government or any other party involved. One must not forget that, if these two-third population would be empowered in true sense, our position would be much maximized on the developmental front where we desperately struggling presently-this is only foreseeable reason where presently we are lagging behind from China where the relative is very feeble in comparison of ours. Let us see, how the implementation is going to work this time…
Atul Kumar Thakur
April 26th2010, Sunday, New Delhi
atul_mdb@rediffmail.com
In India, poverty estimation is primarily carrying by fixing a poverty line based on a differentiated calorie-norm; this approach has been developed as a custom over the years since its prioritization by a task force of the Planning Commission in 1979 that defined the poverty line as on per capita expenditure at which the average per capita-per day calorie intake was 2400 calories in rural areas and 2100 calories in urban areas.
Unfortunately, this method remains instrumental as authentic tool of poverty estimation which work on average per capita expenditure incurred by that population group in each state which consumed these quantities of calories-the 1973-74 survey of NSSO had taken it into account as the poverty lines. Based on the observed consumer behavior in 1973-74, the poverty lines at Rs49.09 per capita per month in the rural areas and Rs56.64 per capita per month in urban areas-these poverty lines were updated over the years by simply accounting for changes in Consumer Price Indices {CPI}, thus the all-India poverty lines updated for 2004-05 were Rs356.30 in rural areas and Rs538.60 in urban areas, per capita per month.
That faulty standard explicitly revealed the government’s inflexible mindset on policy intervention which always rely on the collective generalizations as major tool-regardless of what the Planning Commission comes up with, the empowered ministers remained stick to their prefixed line.
In such stodgy working method, two most important determinants of poverty;Purchasing Power Parity {PPP} and deprivation remains excluded at the cost of calorie, that itself creates lot of perplexity in true judgment of poverty. Absence of universalization of social security schemes and access of all BPL families to Public Distribution System {PDS} further engraving the situation; based on urban line of poverty measurement, total number of poors in India have risen from about 403 million in 1993-94 to about 407 million in 2004-05.
Wrong exclusion of around 77% of population living merely on R16/day {National Commission on Enterprise in Unorganized Sector, 2004-05} is making India’s performance pathetic on the Global Hunger Indexes-surveys of multilateral agencies like UN and IFPRI demonstrate the actuality through its Human Development Reports.
There are many impediments are haunting on the way of poverty alleviation but its measurement is most daunting one among them which keep teasing to targeted efforts-asymmetry could be understand through these figures, National Sample Survey’s {2004-05} poverty rate compilation showed the variance on poverty level among nodal agencies, as per Planning Commission {27.5%}, NCEUS {77%}, Suresh Tendulkar Committee {37.2%}, Rural Development Ministry’s {50%}-on which data ones should rely? After a long slumbering, government and Planning Commission have accepted the report of Suresh Tendulkar whose projection on poverty rate is much higher than earlier contemplation of government.
The gross failure of government’s standing shows that, act is more important than preaching on the issue of hunger and poverty estimation. There is need to extend the stake to these 77% population of country who are dwelling with low access of food, sanitation, finance, education etc.
By providing entitlement of basic necessities to these marginalized section, government can ensure the equitable growth which is very essential in the size of country we have-alienation of such size is in no manner a feasible option before the government or any other party involved. One must not forget that, if these two-third population would be empowered in true sense, our position would be much maximized on the developmental front where we desperately struggling presently-this is only foreseeable reason where presently we are lagging behind from China where the relative is very feeble in comparison of ours. Let us see, how the implementation is going to work this time…
Atul Kumar Thakur
April 26th2010, Sunday, New Delhi
atul_mdb@rediffmail.com
Tuesday, April 27, 2010
The World of Derivatives
Derivatives are specialized contracts which marks an agreement or an option to buy or sell its underlying's up to pre-choreographed time in the future at a prearranged price,which is know as the exercise price. The word “derivatives” originated from mathematics and signify the variables, these variables are derived from another variable-they have no value of their own and they derive their value from the value of some other asset, that’s commonly known as underlying.
Not in modern sense,though the history of derivatives is surprisingly longer and could be traced back since the age of Mahabharata,albeit advent of modern day’s derivatives contracts can be attributed to the need for farmers to protect themselves from any decline in the price of their corps due to delayed monsoon or over production.
The first “futures” contracts can be traced to the “Yadoya” rice market in Osaka {Japan} around 1650-those were the explicitly standardized contracts which resembled very close to today’s futures contracts. The Chicago Board of Trade {CBOT}, the largest derivative exchange in the world was established in 1848 where forward contracts on various commodities were standardized around 1865-aftetwards, futures {contracts}have remained more or less in the same form, as we know them in modern understanding.
In Indian case too-derivatives have a long standing presence; the commodity derivative market has been operationalizing in India since the nineteenth century with organized trading in cotton through the establishment of Cotton Trade Association in 1875, since than contracts on various other commodities have been introduced as well.
Indian market is in growing phase with seven-eight years of operation in exchange traded financial derivatives, those were introduced in India in June 2000 at the two major stock exchanges-NSE and BSE.Further National Commodity &Derivatives Exchange Limited {NCDEX} started its operation in December 2003, to provide a platform for commodities trading-with slew of measures, the derivatives market in India has grown exponentially over the years, especially at NSE.
Stock futures are the highest traded contracts on NSE accounting for around 55% of the total turnover in derivatives trade at NSE, as on April13, 2005. Broadly derivatives can be categorized in three orders-I. Simple derivatives {plane Vanilla products}, II.Complex derivatives {exotic products} and III.Very complex products designed and suitable to particular client only.
Indian banks remains mostly untouched with the last two products as RBI doesn’t permit too much open positions on foreign exchange; many Indian banks did the deals and in turn entered into back to back understanding with the foreign banks-it was so because Indian banks didn’t have those exotic products, they bought it from foreign banks and sold them to corporates.Thanks to our regulators, who never believed in “greed is good” principle like the protagonist of 1987 released Hollywood blockbuster {Wall Street} or its real executioner{bankers} at Wall Street…we also can’t ignore the wise saying of grand old man of investment, Mr. Warren Buffet, who in aggrieved state pronounced on the wake of deep recession in 2008, derivatives as “Financial Weapons of Mass Destruction”.
Indeed he wasn’t wrong as longer as he saw its bad outcome by the acts of its maligners {greedy bankers from Wall Street} otherwise, a financial product even derivative can’t stand so destructively on their own foot-these potential outside push is the real threat behind the entire web of derivative trading.
A single derivative product known Credit Default Swaps {CDS} has alone fuelled the matter for more than six dozens bank failure, alone in U.S.A since the break out of recession in 2007-wrong doings are still far from being over as another giant from Wall Street {Goldman Sachs}is badly tapped in its wave of unethical handling.Derivatives as a financial product is very useful until its bounded with an ethical conscience and incentive for mass enrapture otherwise its repercussions can be easily ransack the entire order…proper regulatory execution and shared vision of institutions involved in this field can lead to a sustainable way-out.
Atul Kumar Thakur
April24th 2010, Saturday, New Delhi
atul_mdb@rediffmail.com
Not in modern sense,though the history of derivatives is surprisingly longer and could be traced back since the age of Mahabharata,albeit advent of modern day’s derivatives contracts can be attributed to the need for farmers to protect themselves from any decline in the price of their corps due to delayed monsoon or over production.
The first “futures” contracts can be traced to the “Yadoya” rice market in Osaka {Japan} around 1650-those were the explicitly standardized contracts which resembled very close to today’s futures contracts. The Chicago Board of Trade {CBOT}, the largest derivative exchange in the world was established in 1848 where forward contracts on various commodities were standardized around 1865-aftetwards, futures {contracts}have remained more or less in the same form, as we know them in modern understanding.
In Indian case too-derivatives have a long standing presence; the commodity derivative market has been operationalizing in India since the nineteenth century with organized trading in cotton through the establishment of Cotton Trade Association in 1875, since than contracts on various other commodities have been introduced as well.
Indian market is in growing phase with seven-eight years of operation in exchange traded financial derivatives, those were introduced in India in June 2000 at the two major stock exchanges-NSE and BSE.Further National Commodity &Derivatives Exchange Limited {NCDEX} started its operation in December 2003, to provide a platform for commodities trading-with slew of measures, the derivatives market in India has grown exponentially over the years, especially at NSE.
Stock futures are the highest traded contracts on NSE accounting for around 55% of the total turnover in derivatives trade at NSE, as on April13, 2005. Broadly derivatives can be categorized in three orders-I. Simple derivatives {plane Vanilla products}, II.Complex derivatives {exotic products} and III.Very complex products designed and suitable to particular client only.
Indian banks remains mostly untouched with the last two products as RBI doesn’t permit too much open positions on foreign exchange; many Indian banks did the deals and in turn entered into back to back understanding with the foreign banks-it was so because Indian banks didn’t have those exotic products, they bought it from foreign banks and sold them to corporates.Thanks to our regulators, who never believed in “greed is good” principle like the protagonist of 1987 released Hollywood blockbuster {Wall Street} or its real executioner{bankers} at Wall Street…we also can’t ignore the wise saying of grand old man of investment, Mr. Warren Buffet, who in aggrieved state pronounced on the wake of deep recession in 2008, derivatives as “Financial Weapons of Mass Destruction”.
Indeed he wasn’t wrong as longer as he saw its bad outcome by the acts of its maligners {greedy bankers from Wall Street} otherwise, a financial product even derivative can’t stand so destructively on their own foot-these potential outside push is the real threat behind the entire web of derivative trading.
A single derivative product known Credit Default Swaps {CDS} has alone fuelled the matter for more than six dozens bank failure, alone in U.S.A since the break out of recession in 2007-wrong doings are still far from being over as another giant from Wall Street {Goldman Sachs}is badly tapped in its wave of unethical handling.Derivatives as a financial product is very useful until its bounded with an ethical conscience and incentive for mass enrapture otherwise its repercussions can be easily ransack the entire order…proper regulatory execution and shared vision of institutions involved in this field can lead to a sustainable way-out.
Atul Kumar Thakur
April24th 2010, Saturday, New Delhi
atul_mdb@rediffmail.com
Inculcating a Sense of Banking Consolidation
At global arena, last few years would be recalled for all troublesome reasons in banking sector…havocking recession and later relentless banking failures, bailouts, grim faces of western regulators were suffice to epitomize the gravity of situation which on most of occasion appeared as out of hand. In India too, financial sector at large faced the ire of world-wide recession although the scale was much lower in comparison of western counterparts owing to differences of regulatory norms and variation of disastrous greed.
Obviously cutting edge of Indian financial sector in the wake and after recession allowed it to practice on its own propositions unlike western economies and U.S.A particularly where the focus is now shifting again towards the days of Glass-Steagall Act that originated to contain the financial crisis, immediately after the depression-I in 1933.
Regardless of its intrinsic values, this act diluted over a long period starting in the 1980’s and eventually withdrawn through the Gramm-Leach-Billey Act or Financial Services Modernization Act in 1999, that grossly paved the way for financial innovation and proliferation. Here, policymakers need to check the weak spots in the system and install checks and balances to strengthen them, and avoid any systematic failure;for Indian regulators, it would be equally imperative to make advance efforts on banking and financial reform with keeping in mind the ground realities.
In Indian context, banking consolidation is the most pertinent case en route to financial sector reform which can lead Indian economy to a new trajectory of growth;banking consolidation makes strong sense here but it must be also accompanied by banking sector reform.The process for amalgamation of Public Sector Banks {PSBs}is directed by The Banking Companies {Acquisition and Transfer Understanding} Act,1970-according to the act, the central government may after consultation with the RBI can formulate a scheme to carry out the process of amalgamation of PSBs.
Even now, the country ‘s largest bank, State Bank of India {SBI}accounts for 30% of total banking stake and no other public sector bank is poising any competition with it, as Punjab National Bank merely sharing the 6% footprints of total Indian banking business. So, apprehensions of western regulators that “too big bank may vulnerable to fail” is hardly rational from India’s point of view as even after considerable restructuring of PSBs, they will remain much smaller than major western banks.
In the past half a century, in most rich countries, the financial sector has become too much large for the real economy-in recent survey of the magazine Economist, it was found that, relative to the size of the economy, banks in the UK are 10 times bigger now than they were four decades back-more or less, this is also the reality of U.S.A but Indian banking pitched distinctly, so they now have reason to knock the opportunities in different manner.With considering on factors such as cultural synergies, geographical presence, profitability and market share-three sorts of merger policy would be pragmatic-I. Merger of Associates banks with the SBI, II. Expansion in Regional Rural Banks merger at further state and later swiftly at national level and III. Voluntary mergers among the nationalized banks, where they must be given choice and feasibility to decide.
Government and regulators must play an enabling role by distressing the fear of proposed maneuverings by ensuring all good materialization for employees and clients through its expanded resources. Two appointment {of consultants} have made in this regards by the Finance Ministry-both of them, Mckinsey&Co and Ernst&Young are foreseeing economies of scale as big factor for PSBs to move in the direction of consolidation, a basic assumption of 7-8% market share by the merger of two banks are foremost in their recommendations but its enactment would depend lot on the measures of regulators and their intertwining with deeper nuances of potential change.
RRBs deserve token appreciation for their daring initiatives of consolidation which left all happy changes in their business and outward reach, which was a long due for them to diversify aggressively. Government and regulators in proper consultations with the all PSBs should find a consensus decision to lead Indian banking to the next level by essentially approaching on the issues of human resource development and more professionalism to mark the differences.
Atul Kumar Thakur
April 25th 2010, Sunday, New Delhi
atul_mdb@rediffmail.com
Obviously cutting edge of Indian financial sector in the wake and after recession allowed it to practice on its own propositions unlike western economies and U.S.A particularly where the focus is now shifting again towards the days of Glass-Steagall Act that originated to contain the financial crisis, immediately after the depression-I in 1933.
Regardless of its intrinsic values, this act diluted over a long period starting in the 1980’s and eventually withdrawn through the Gramm-Leach-Billey Act or Financial Services Modernization Act in 1999, that grossly paved the way for financial innovation and proliferation. Here, policymakers need to check the weak spots in the system and install checks and balances to strengthen them, and avoid any systematic failure;for Indian regulators, it would be equally imperative to make advance efforts on banking and financial reform with keeping in mind the ground realities.
In Indian context, banking consolidation is the most pertinent case en route to financial sector reform which can lead Indian economy to a new trajectory of growth;banking consolidation makes strong sense here but it must be also accompanied by banking sector reform.The process for amalgamation of Public Sector Banks {PSBs}is directed by The Banking Companies {Acquisition and Transfer Understanding} Act,1970-according to the act, the central government may after consultation with the RBI can formulate a scheme to carry out the process of amalgamation of PSBs.
Even now, the country ‘s largest bank, State Bank of India {SBI}accounts for 30% of total banking stake and no other public sector bank is poising any competition with it, as Punjab National Bank merely sharing the 6% footprints of total Indian banking business. So, apprehensions of western regulators that “too big bank may vulnerable to fail” is hardly rational from India’s point of view as even after considerable restructuring of PSBs, they will remain much smaller than major western banks.
In the past half a century, in most rich countries, the financial sector has become too much large for the real economy-in recent survey of the magazine Economist, it was found that, relative to the size of the economy, banks in the UK are 10 times bigger now than they were four decades back-more or less, this is also the reality of U.S.A but Indian banking pitched distinctly, so they now have reason to knock the opportunities in different manner.With considering on factors such as cultural synergies, geographical presence, profitability and market share-three sorts of merger policy would be pragmatic-I. Merger of Associates banks with the SBI, II. Expansion in Regional Rural Banks merger at further state and later swiftly at national level and III. Voluntary mergers among the nationalized banks, where they must be given choice and feasibility to decide.
Government and regulators must play an enabling role by distressing the fear of proposed maneuverings by ensuring all good materialization for employees and clients through its expanded resources. Two appointment {of consultants} have made in this regards by the Finance Ministry-both of them, Mckinsey&Co and Ernst&Young are foreseeing economies of scale as big factor for PSBs to move in the direction of consolidation, a basic assumption of 7-8% market share by the merger of two banks are foremost in their recommendations but its enactment would depend lot on the measures of regulators and their intertwining with deeper nuances of potential change.
RRBs deserve token appreciation for their daring initiatives of consolidation which left all happy changes in their business and outward reach, which was a long due for them to diversify aggressively. Government and regulators in proper consultations with the all PSBs should find a consensus decision to lead Indian banking to the next level by essentially approaching on the issues of human resource development and more professionalism to mark the differences.
Atul Kumar Thakur
April 25th 2010, Sunday, New Delhi
atul_mdb@rediffmail.com
Self Help Groups: Catalyst of Microfinance Movement
Self Help Groups {SHGs} programme is the flagship microfinance intervention of NABARD which was launched as a pilot project on February 26th 1992 and deserve to be considered as a landmark development in the banking with the poor. In its part, RBI accepted most of the major recommendations and extended the SHG-Bank Linkage Programme beyond the pilot stage to as a normal business activity of the banking sector.
Now it’s a proven reality that the Bank Linkage Programme is one of the most cost effective components of microfinance movement-major change that it bestowed upon the Indian financial sector that banking with the poor is no longer remain an impractical and unachievable idea,it's a real accomplishment in the rural segment of banking.
This pragmatic initiative has immense growth potential for disadvantaged section that hitherto remained secluded from earlier poverty alleviation programmes. Despite many impediments, the programme has made remarkable socio-economic impact on empowerment of women in rural areas which considerably changing the institutional landscapes with better entitlement of enterprising poors. In last two decades, it impacted the lives of eight crore rural people across the country besides this, the creation of SHG has enabled the banking system to expand their footprint and to build a quality credit portfolio with those segments of the unbanked rural population.
Infact broadening of SHG is highly process specific and possess lot of room for innovative practices-beyond micro-savings and micro-credit, other financial services like micro-savings and micro-credit, other financial services like micro insurance, micro-remittances and micro-pension etc are presently placed in nascent stage but surely they would appeared more resonant in future ahead to cater the diversified needs of rural poors.
Unprecedented response of the SHG-Bank Linkage Programme facilitated by NABARD is truly acting as movement with a huge back-up of excellent micro finance clients. Complete attainment of universal financial access is most urgent thing as next course of action,as its proved now enterprises can only effectively thrive on institutional finance-here it’s also equally imperative to rationalize the private MFIs exorbitant interest regime.
Studies shows that microfinance services helps in poverty alleviation through its broad canvass of insuring equitable growth and spreading the programme in rest India to match its strength in southern states. In last two decades, SHGs have emerged as pivotal route of micro financial activities-as on March 31st 2009, banks credit outstanding against 42.4 lakh SHG stood at Rs 22,679.85 crore-on an average, this accounts to about Rs76, 000 per SHG and average loan per member stood at Rs5, 400 which is still very low in perspective of huge challenges.
The institutional achievements of the SHG-Bank Linkage Programme are most remarkable in terms of participatory and sustainable poverty alleviation and reaching to the developmental goals. On the social indices front; non-financial activities of SHGs are very crucial in attainment of actual socio-economic inclusion and empowerment. As government is contemplating some new regulatory changes to boost the microfinancial scenario, it would be naturally in priority to see more attention on SHGs increasing role in developmental framework. Presently few financial institutions except Regional Rural Banks {RRBs} and to some extant Co-operative banks, is taking optimum interest in empowerment of SHGs-this is a haunting concern as the marginalization of SHGs would dampen the entire euphoria of microfinance.
For banking sector, role of SHGs can be modeled as potential vehicle of financial inclusion in different capacity-from a potential client to a Banking Correspondent {BC}albeit sincerity must be ensured, so merely treating them as buzzword wouldn’t be suffice. Only genuine action and stout determination for socio-economic turnaround can lead this initiative to the crest of activities in rural financing. At any policy maneuverings, it must be clear in the mind of its architect that many unique challenges have to reckon with at next level of its execution-which can be addressed only through the innovation and constructive enterprise.
Atul Kumar Thakur
April 24th 2010, Saturday, New Delhi
atul_mdb@rediffmail.com
Now it’s a proven reality that the Bank Linkage Programme is one of the most cost effective components of microfinance movement-major change that it bestowed upon the Indian financial sector that banking with the poor is no longer remain an impractical and unachievable idea,it's a real accomplishment in the rural segment of banking.
This pragmatic initiative has immense growth potential for disadvantaged section that hitherto remained secluded from earlier poverty alleviation programmes. Despite many impediments, the programme has made remarkable socio-economic impact on empowerment of women in rural areas which considerably changing the institutional landscapes with better entitlement of enterprising poors. In last two decades, it impacted the lives of eight crore rural people across the country besides this, the creation of SHG has enabled the banking system to expand their footprint and to build a quality credit portfolio with those segments of the unbanked rural population.
Infact broadening of SHG is highly process specific and possess lot of room for innovative practices-beyond micro-savings and micro-credit, other financial services like micro-savings and micro-credit, other financial services like micro insurance, micro-remittances and micro-pension etc are presently placed in nascent stage but surely they would appeared more resonant in future ahead to cater the diversified needs of rural poors.
Unprecedented response of the SHG-Bank Linkage Programme facilitated by NABARD is truly acting as movement with a huge back-up of excellent micro finance clients. Complete attainment of universal financial access is most urgent thing as next course of action,as its proved now enterprises can only effectively thrive on institutional finance-here it’s also equally imperative to rationalize the private MFIs exorbitant interest regime.
Studies shows that microfinance services helps in poverty alleviation through its broad canvass of insuring equitable growth and spreading the programme in rest India to match its strength in southern states. In last two decades, SHGs have emerged as pivotal route of micro financial activities-as on March 31st 2009, banks credit outstanding against 42.4 lakh SHG stood at Rs 22,679.85 crore-on an average, this accounts to about Rs76, 000 per SHG and average loan per member stood at Rs5, 400 which is still very low in perspective of huge challenges.
The institutional achievements of the SHG-Bank Linkage Programme are most remarkable in terms of participatory and sustainable poverty alleviation and reaching to the developmental goals. On the social indices front; non-financial activities of SHGs are very crucial in attainment of actual socio-economic inclusion and empowerment. As government is contemplating some new regulatory changes to boost the microfinancial scenario, it would be naturally in priority to see more attention on SHGs increasing role in developmental framework. Presently few financial institutions except Regional Rural Banks {RRBs} and to some extant Co-operative banks, is taking optimum interest in empowerment of SHGs-this is a haunting concern as the marginalization of SHGs would dampen the entire euphoria of microfinance.
For banking sector, role of SHGs can be modeled as potential vehicle of financial inclusion in different capacity-from a potential client to a Banking Correspondent {BC}albeit sincerity must be ensured, so merely treating them as buzzword wouldn’t be suffice. Only genuine action and stout determination for socio-economic turnaround can lead this initiative to the crest of activities in rural financing. At any policy maneuverings, it must be clear in the mind of its architect that many unique challenges have to reckon with at next level of its execution-which can be addressed only through the innovation and constructive enterprise.
Atul Kumar Thakur
April 24th 2010, Saturday, New Delhi
atul_mdb@rediffmail.com
Goldman Sachs-You too Brute!
Now, when the things started to slowly settled down at the Wall Street and regulators found time to back in their usual business; a new storm meanwhile again breakdown those slight cheering-this time, fraud originated from iconic investment bank Goldman Sachs through creation of huge investment designed to fail. The fraud struck inside the Goldman Sachs marks an unusual tracts as the firm marketed mortgage-backed securities as they sought to make profits by betting that such securities would plummet in value –surprisingly, regulatory norms in U.S.A never legally prohibited such act until the fraud broke out, now Securities and Exchange Commission {SEC}has making some statuary advances and now labeling charge on Goldman Sachs for creating and marketing securities that were deliberately designed to fail.
So top notch client could make money off that failure-unfortunately such case is not alone confined with Goldman Sachs, impropriety is still rampant among the top-notch professionals in financial sector and within a year, they forget about the alarm of bailouts…Lloyd Blankfein, CEO of Goldman Sachs is still dwelling with the complacency of $3.46 billion dollars profit which his bank has made in the last quarter of previous financial year and hardly paying any heed to the civil suit which SEC has filled on 16th April.
This clearly marks the falling ethical standard in financial sector-this case has strengthened the belief that any expectations for voluntary compliance of ethical practices are void, so regulatory norms that govern these sorts of transactions needed an immediate tectonic shift. Rectification must start from a statuary mandate to all derivative trade on exchange and in standard contracts, not in customized, built to suit arrangements like the ones Goldman created in this new episode.
Hedging as an instrument met with misdemeanor through such occurrence, usually banks that have lent money to low-credit borrowers use swaps as a hedge that ensure them from further defaults-till this stage nothing seems wrong but it’s only one side of history. The grave problem is that Credit Default Swaps {CDS} route is open to anyone even to those who haven’t possess any sort of credibility-this led to reckless speculation to bet on entities, in which even they don’t have any entitlement that in loose terms present cases like letting your neighbor take out an insurance policy on your life.
These unhygienic practices by the smart guys from Wall Street who placed on top order after scoring high grades in Ivy League business schools hardly resemble any constructiveness in their professional involvement. Crux of problem lies in the pushing of the unaware entities into these risky schemes-such like ABASCUS2007-AC1; most of them were foreign banks and pension funds, they lost about a billion dollars.
Top order of management at Goldman Sachs were pressed through greed’s to convey right message to customers that investments offered by the bank were supported by very risky mortgages in an already over-priced U.S Housing market-major factor of these shading was Johan Paulson{a billionaire investor}who influenced the bank’s selection of these instrument since he knows they were bad risks but going to beneficial from personnel shake-he alone made billions of dollars by indulging in betting that loan in transaction would fail. It’s quite astonishing to see again the insurer of Goldman Sachs, AIG to indulge in such bad deal within a year after its massive bailout with $180 billion, hard earned money of taxpayers.
The entire case is a brazen example of predatory use of mass investors in favour of few mighty by adopting the means of misinterpretation and deceiving through the myopic route of Collateralized Debt Obligations {CDO}. This is an explicit crime from high ranked officials who are unlikely to face any stern action even after all disclosure-rather they may be awarded with multi million dollars as bonus with the bailouts money. It’s hard to expect from these greedy professionals to display their skills for social betterment…running Ferrari and making millions dollars would remain their pastime for job regardless of this disastrous fraud. As the last resorts, the regulators have to perform their final duty…what one can expect more from them than some more initiatives in financial sector reform especially in the derivatives trading. Greed must be controlled and choreographed to adapt with the limitation of real life…
Atul Kumar Thakur
April 24th 2010, Saturday, New Delhi
atul_mdb@rediffmail.com
So top notch client could make money off that failure-unfortunately such case is not alone confined with Goldman Sachs, impropriety is still rampant among the top-notch professionals in financial sector and within a year, they forget about the alarm of bailouts…Lloyd Blankfein, CEO of Goldman Sachs is still dwelling with the complacency of $3.46 billion dollars profit which his bank has made in the last quarter of previous financial year and hardly paying any heed to the civil suit which SEC has filled on 16th April.
This clearly marks the falling ethical standard in financial sector-this case has strengthened the belief that any expectations for voluntary compliance of ethical practices are void, so regulatory norms that govern these sorts of transactions needed an immediate tectonic shift. Rectification must start from a statuary mandate to all derivative trade on exchange and in standard contracts, not in customized, built to suit arrangements like the ones Goldman created in this new episode.
Hedging as an instrument met with misdemeanor through such occurrence, usually banks that have lent money to low-credit borrowers use swaps as a hedge that ensure them from further defaults-till this stage nothing seems wrong but it’s only one side of history. The grave problem is that Credit Default Swaps {CDS} route is open to anyone even to those who haven’t possess any sort of credibility-this led to reckless speculation to bet on entities, in which even they don’t have any entitlement that in loose terms present cases like letting your neighbor take out an insurance policy on your life.
These unhygienic practices by the smart guys from Wall Street who placed on top order after scoring high grades in Ivy League business schools hardly resemble any constructiveness in their professional involvement. Crux of problem lies in the pushing of the unaware entities into these risky schemes-such like ABASCUS2007-AC1; most of them were foreign banks and pension funds, they lost about a billion dollars.
Top order of management at Goldman Sachs were pressed through greed’s to convey right message to customers that investments offered by the bank were supported by very risky mortgages in an already over-priced U.S Housing market-major factor of these shading was Johan Paulson{a billionaire investor}who influenced the bank’s selection of these instrument since he knows they were bad risks but going to beneficial from personnel shake-he alone made billions of dollars by indulging in betting that loan in transaction would fail. It’s quite astonishing to see again the insurer of Goldman Sachs, AIG to indulge in such bad deal within a year after its massive bailout with $180 billion, hard earned money of taxpayers.
The entire case is a brazen example of predatory use of mass investors in favour of few mighty by adopting the means of misinterpretation and deceiving through the myopic route of Collateralized Debt Obligations {CDO}. This is an explicit crime from high ranked officials who are unlikely to face any stern action even after all disclosure-rather they may be awarded with multi million dollars as bonus with the bailouts money. It’s hard to expect from these greedy professionals to display their skills for social betterment…running Ferrari and making millions dollars would remain their pastime for job regardless of this disastrous fraud. As the last resorts, the regulators have to perform their final duty…what one can expect more from them than some more initiatives in financial sector reform especially in the derivatives trading. Greed must be controlled and choreographed to adapt with the limitation of real life…
Atul Kumar Thakur
April 24th 2010, Saturday, New Delhi
atul_mdb@rediffmail.com
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