What Financial Meltdown Laments!

At least since last twelve quarters, global financial system has been witnessing the most lethal repercussions of unethical practices and unsound creation of financial products designed to suit for speculation and betting by its high profile line management.
Hundreds of bank failures world-wide, statutory shifting of holdings-following it from Wall Street to the Central Business Districts of India easily implies the unfortunate changes that have taken place with the effects of financial crisis.

Despite all wrong with such failureness, it also cast some positive point as an option of learning…Indian economy, being resilient and growing must have to pick some quick changes for overall improvement in its risk averseness. Primarily, Indian banking sector which despite emerging less scratched, suffered many implicit and long-term setbacks on the counts of prospects.
Global penetration of Indian banks have essentially suffered on the account of adverseness prevailing in external markets…mood and steps have altered after the global economic crisis and unprecedented inflationary challenges followed it. In certain senses, it’s an opportunity for Indian financial system to resonate its reach and viability within the domestic market, as still majority of its terrain is under-tapped and have huge potential to grow like the recent telecom success story.

Except systemic weakening of the Public Sector Telecom Companies {BSNL&MTNL}in the name of healthy competition, there are some positive points, like “reaching to the rural segments” can be a point of reference for further banking expansion to hitherto untouched terrains.
Instead of too much idealisation, here rational and innovative business practices are more imperative-like the telecom sector, Indian banks have to think upon the innovative products that will be compatible to the huge unbanked peoples of this country. Instead of external blind imitation, enactment to the specific needs of these targeted segments would be the true prudence. Reason of my emphatic stressing on the specific re-modelling and introduction of new financial services is primarily to see it as an extension of banking from existing level to a desired height.

For a while, model of Gramin bank of Bangladesh or present way of private Micro financial operation can’t be even appropriate for slight inferences. Idealistic and lately unrealistic notions would be hardly suitable for Indian markets…the sizable presence of Regional Rural Banks {RRBs}along with some commercial banks are accomplishing much better then any prospective option from above sighted examples.
They of course banks with the poors albeit in comparison of Indian banks, their lending rates seems unfeasible and exorbitant, so instead of making peoples poor and bank upon them, it would be better to empower them and enable them for inclusion in mainstream banking. Neither we can play on superficial western structured financial products nor on other exotic alternatives-plights of rural financing can be addressed only through the adoption of no-frills practices by the banks and other financial intermediaries.

Indeed sharpening of effects within the financial eco-system would depend upon the synergy emerging out of co-ordination among the various change agents and almighty regulators. In essence, RBI has been playing a formidable role on the regulation front but wisdom can be counted most often only through the defensive spectacles.
Progressivism is the need of hour which RBI should be and must be reckon as the catalyst of policy formulation in next all course of action. Defying of the grave reality, that around sixty percent of Indian population is still out of any sort of banking or institutional financial services would be extremely distorting and manipulative in substance.

Providing adequate universal services through smooth access mechanism will be the most revolutionising occurrence in practices-the entire exercises like, CSR and others have to be better comply with the idea of responsible banking that have broader meaning and significance in practical banking procedures. Frequent convulsions in the world of finance necessitates now to fix and chase our own targets…our characteristics are unique, so we should have our first hand propositions and ways of formulation to proceed better. Maximum financial inclusion would be the wisest exercise from domestic front.
Atul Kumar Thakur
July7th 2010, Wednesday, New Delhi
atul_mdb@rediffmail.com