Sunday, November 27, 2016


As the year was drawing to a close, some legends such as Balamuralikrishna, Menon and Fidel Castro signed off majestically after having defied odds through their lifetime and not even giving an inkling of their imminent exit. Even as these legends who had touched our lives in one way or another was sinking in, the television beamed two memorable icons, Stanley Laurel and Oliver Hardy having the gumption to enter a mansion and let it out to third parties whilst the actual owner was absent. The tale took a twist when the owner turns up and Laurel identifies him while Hardy confines him to a cupboard in a rip roaring hilarious silent movie with the trademark kick delivered by Hardy to his chum Laurel.

This took yours truly to the first time television was viewed which also happened to be a show of the inseparable duo. In fact, this was a show we were taken to make us realize that the duo were real characters who had turned into comics and not vice versa such as Batman, Superman, Harry Potter et al. Unbelievable but true and these men have taught generations a sense of humour, inspired comedians, instilled camaraderie and may be one of the rare duo who also were converted into cartoon characters. These two figure among the men and women who have consciously and unconsciously moulded our characters, influenced our choice of words, left their indelible imprint on our gestures and form the bedrock of many of our friendships.

This led your truly to google the lifetime of the duo. Coincidence. 1926 is the year in which they came together while a revolutionary was born in Cuba. Another coincidence. They featured in a show This is your life on 1-12-1954 which is just days away as we pay this tribute. Astonishingly the duo were no more even as yours truly landed on the planet. Unlike the ones who just departed, these two touched lives even after they were gone and generations that came thereafter.

The compositions of Balamurali with the unique beginning of "Hari" or the works of Menon will also touch generations to come. The exploits of Castro will be fable for generations to come. These men did not just live life or lead life but infused life for generations and centuries. If they could do it for generations, could we not attempt at least leading our own lives rather than live life for others' perceptions? A question yours truly ponders on as another year looms large. May the humour of the irresistible duo lead everyone through the coming year 2017.

Sunday, November 20, 2016


The demonetisation of currencies in India has led to a debate as to whether the option of tackling the Non performing assets of the financial institutions would have been a better option and causing lesser inconvenience to the public at large. The point is well taken that this is also an issue to be addressed.

The issue, however, many are not aware of the intricacies of the classification norms of the Reserve Bank of India or its intent. The Reserve Bank being a regulatory body desires to ensure that at no point liquidity is in a crisis resulting in a run on any bank or financial institution. In this direction it prescribes cash reserve ration and statutory liquidity ratios to be maintained. In fact, the SBI is on record stating that the biggest non performing asset is the amount parked as cash reserve ratio as it does not earn any returns. Further, to ensure a strict vigil on the borrowers, it terms any borrowing which has even a small default of either repayment of principal or interest either in full or part for a period of 90 days or more to be classified as a non performing asset. The non performing assets are itself classified as sub standard assets, loss assets and doubtful assets. Besides this the institutions are also to classify the rest of them as standard assets. The mere classification does not have any bearing either on its realization or the borrowing turning bad warranting a write off.

The Reserve Bank recognizes this aspect and only requires a portion of the unsecured exposure to be provisioned for the purposes of non performing assets. Thus, if one were to consider a loan of Rs 1 crore lent by the bank with a security of an immovable property worth Rs 3 crores, there would be no real reason for provisioning against the asset in case of a couple of defaults as the unsecured portion would still be nil. It is only when the unpaid interest component reaches Rs 2 crores or is nearing it that provisioning needs to be made.

It is taking into account this cushioning the financial institutions do not really declare their entire non performing assets leading to situations wherein the institution could take a credibility beating on one of such hidden defaulters turning bad. Restructuring is also used as a window dressing tool to defer classification of such assets as non performing assets.

The moot question is how to address the issue. 

It is already settled principle that many institutions are not covered by the provisions of section 43 D of the Income tax Act to defer recognition of income on bad and doubtful debts. Thus, all such financial institutions need to be taxed on the accrued income. The amount having been taxed will drive the institutions to realize the income. The co operative banks are a sector which need to be focussed on. Secondly, the Tribunals ruling against the settled judgement of the Supreme Court in the case of Southern Technologies needs to be overruled unilaterally by executive action or the Supreme Court taking cognizance of the same.

Secondly, the scheduled banks which are foreign banks need to be excluded from the provisions of section 43 D of the Income tax Act.

Thirdly, it needs to be pointed out that all institutions are entitled for the benefit of the provision for bad and doubtful debts being allowed as expenditure. This being the case the need for these institutions to exclude such income from accounting does not arise. It is only for the purpose of reduction of its cash reserve ratio that this computation needs to be made and not for the purposes of taxation.

Fourthly, the provisions of section 43 D by itself needs to be considered for removal to avoid the Government losing revenue on this count.

There is a need for monitoring such assets which are on the verge of moving from standard to sub standard, sub standard to doubtful and loss categories. The prevention of such downward movement is the first step towards fiscal discipline. Instead of mere focus on percentage of non performing assets to the advances, it is necessary to focus on the quantum of such lateral movements both upward and downward to assess the performance of the banks and financial institutions. If this is done, the scope for window dressing reduces as virtually all accounts are under the scanner instead of the ratio to gross advances and the provisioning adequacy. This would have ensured that accounts such as Kingfisher were identified much before they turn bad.

The next step would be to mark all restructured loans as non performing as they require to be monitored on a priority basis even higher to bad assets. This is due to the fact that in these cases a quantum of the interest is being foregone through the restructuring process. All such restructured assets require to be barred from moving Courts at the time of realization to avoid undue delays. 

As a preventive measure granting loans on the basis of revenue stream with no collateral needs to be discouraged. Startups with innovative ideas with no fiscal backing need to be brought under subsidies rather than tampering with finances of financial institutions. 

The above will make it clear that the issue of non performing assets may mop up finances but will not rid the system of counterfeit notes, unaccounted money stashed or hoarded away nor flush into the system the currencies which are hoarded. In fact, the current process is not demonetization but a process of replacing currencies with new ones. The difference being that the entire notes were sought to be sucked in before the new currencies were deployed to have the desired shock impact on hoarders and counterfeiters.

In fact, the impact would have been better had the decision been to replace the same with more of lower denomination notes such as Rs 10/-, 20/- and 50/- besides 100/-. This would have ensured that the common man did not face hassles. Even now the decision to release the Rs 2000/- notes ahead of the Rs 500/- notes is puzzling as the system does not have the required lower denominations for utilization. This also brings out the moot point that any decision requires field level inputs rather than intellectual decisions put through and addressing them with off the cuff solutions.

The biggest spin off of this effort is we have now a new slogan - Jai Jawan, Jai Kisan, Jai Vigyan, Jai Bankman  

Monday, November 14, 2016


"Black Tuesday", cried some while others hoped for a "whitewash". Though Demonetisation was in the air from the campaign days of 2014, there was an element of surprise, awe and shock in the air. These were followed by serpentine queues, heated debates, street corner discussions while the Mahatma laughed his way to the bank.

As one analysed the goings on from the sidelines, we could see collegians exchange their valuable pocket money while senior citizens and housewives jostled along with the youth to change their "mighty savings". If R K Laxman were around, we could have definitely expected a cartoon on the housewives lampooning the PM with the common man by the side for unearthing their "hard earned" pin money a la a Dushasana disrobing the legendary Draupadi. These women chose to disclose these facts to "brothers" rather than the "in-laws" little knowing that these brothers were brothers in arms with their spouses.

The working class tried to earn a profit by allowing access to their bank accounts or exchanging currencies at various banks for princely sums of Rs 200 to Rs 500 as " service charges" throwing light on the entrepreneurship of this class which can "encash" any crisis while also playing the good samaritan to the hapless senior citizen or divyang persons. Some college students volunteered to help streamline queues and distribute forms whilst others chose to plan their next withdrawal.

Suddenly, India awoke to the possibility of a cashless day. 

Queries emerged where were the hoarders of black money. The TTD hundi and the Ganges displayed the hard core attitude of this class. This class had failed to rise above board when the nation became independent. It refused to support a leader like Lal Bahadur Shastri to fight wars or hunger. It could care less when the nation had hardly any food stocks. It has missed more than 20 schemes to come clean and is ready to lose the entire sum rather than use it for some purpose. Only 31st March the last day to exchange the currencies at Reserve Bank will let us know what is the extent of currencies that have been sought to be burnt or buried or kept as a treasure trove to be sold in latter days as a souvenir at Sotheby's.

The intent is not lost on the general public who have humoured themselves into the situation. We have had owners of nearly Rs 67000 crores taking a brave step. Will the rest choose to pay a nominal sum of 30% on their illgotten money and deposit in the accounts? Will they at least care to share the booty with the nation in the form of donations to the National Defence Fund or the Prime Minister's National Relief Fund or Army Welfare Fund?  Or will they choose to revel in the Emperor's New Clothes as every other soul sees through their stark greed?

Let us be clear that the persons who have so far used the methods to deposit or exchange are the commonmen and not the ones who have hoarded money except in the odd cases of jugaad. Let this battle take us ahead in our war within the nation to make the haves behave responsibly.

Let it be disseminated that while the previous demonetisations were for high value currency in small numbers and with practically no exchanges a la this time, we are in the process of taking out over 80% of the currency notes in circulation and replacing them. The costs are high but the rewards are higher too. The only hitch is why introduce again high value currencies knowing the intent? Is it a case of giving the errant a longer rope or the hope of the return of the prodigal son? 

Sunday, June 5, 2016


The word "hospital" spells panic in many minds. The institution which is to in reality mean a welcome place in times of need such as ailments has over the time turned into a lucrative business which are run by non medical personnel, with management jargons which many management gurus would vie to inscribe in their next profound thought and the irony of the patient who would display impatience. The present scenario sometimes makes one think that probably Florence Nightingale or Dr Kotnis or Dr Roy are mythical characters with legends spun by imaginative minds.

Cutting from this labyrinth of words, one must shift to the scene outside an Operation Theatre which is the much revered place of our movie moguls and megaserial makers for whom it is the place for all hysterics and the venue which can legitimise any twist in the tale. Unlike any of those portrayals, a security guard in starched uniform clearly dictates the terms of who can cross the yellow line. There are no nurses who rush in  and out for us to mouth those dialogues of concern as they have their separate exits and entrances which legitimise the earlier day kings having a royal passage through tunnels. The patient who is spirited away from the wards or the casualty to the acronymised OT through a secret passage with a dismissing wave of the hand to the attendant to appear instantaneously before the OT for the sordid wait may sound ominous after the exposure to this "critical twist in the tale arena".

Moving over one finds comfortable seats placed with a water container with which children are playing with abandon. A strategically located cafeteria which also empathetically serves the attendants snacks and beverages with a "service tax" catches the eye making one more comfortable than in a mall having a multiplex. The day there would make one wonder why the movie moguls are unable to make a better representation of this area. Musing thus yours truly makes a sample representation of the events that unfold there.

As the children are toying with the mineral water can to make an optimum mix of hot and cold water while intermittently spraying some of the precious liquid on each other, a man's name is called out and a woman rushes in while the other acquaintances await her return with bated breath. She comes out weeping inconsolably and a sympathetic bystander helpfully offers emotional support by enquiring the status. Between sobs, she says, "Oh! he is fine. The surgery is successful." Mystically one of the women around remarks must be a tyrannical husband. The affected soul nods and then says, " The doctor says he has to be in hospital for at least a week. The insurance will run out and additional money has to be arranged. The man just did not listen to my advice of not having fatty foods and look at the 'price' I have to pay". 

Even as one marvels at the public display of emotions, another set of men sitting around console her by saying, "Madam, this is only a case of cardiac problem. Look at our plight the father and son unnecessarily picked a quarrel with the neighbours and there was a fight which was egged on by some bystanders. Now all of them are in the hospital. Which hero is going to come to our aid? We have to now sell the land to foot this bill".

Hardly, the word ends another chimes in by inquiring with concern, " Where is the land? What is the extent and what price do you expect? My son has met with an accident and he is not the kind who will make a living. If I buy this land may be the money out of it can fetch him some moolah for the living. Please give me a missed call so that we can negotiate at leisure."

This is followed by the stern sentry listlessly announcing the name of a woman for which a man responds while another elderly woman follows him. They reach the door but only one is permitted. After some discussion, it is explained one is the husband and the other is the mother. The all powerful sentry invokes his celestial powers to grant permission to both. Meanwhile, the others continued to engage each other in conversations. Soon the duo emerged and the milling crowd gathered around them and caused enquiries. The result of the investigation was that the duo had been promoted to the rank of father and grandmother respectively. Immediately, one of them said, righteously, " It is not proper to announce the birth of a child without sweets. By the way, is it a boy or a girl?" Another enquired of his relationship only to understand that he was only an acquaintance outside the pristine "OT". Even as this was happening one of the children told crisply, " I do not want toffees. I want a bar chocolate." The mood changed as a box of sweets was procured and distributed amongst total strangers.

This is the world the print and electronic media wants us to believe is unconcerned about the welfare of any other soul. Will these persons who hallucinate take the trouble of checking the ground reality? If only one can trust yours truly, a stressful day can be busted outside an OT even if none of your near or dear ones are in that "critical zone of twist in the tale".

Monday, May 2, 2016


It appears as though the havoc wreaking rains of Chennai were lashing just a couple of days back. The waves of flood material and the launches seem a mirage but for the occasional mention in the poll campaign. The traditional new year showers too have been deceptive and an occasional look at the sign boards give us a sense of assurance that it is indeed the Garden City of India.

The blazing sun of the day have virtually dried up the scant water resources and the drought looks to be staring us in the face. The vagaries of nature are so bewitching that the very people who were tormented by the rains and desperately wished for some sunlight are now sweating it out while yearning for the showers.

It brings to memory the famed tussle between the Sun and Cold winds which are out to prove their strength. The blazing sun makes one shed the varied layers of clothing that the cold winds of winter had forced one to drape. The technological might or the visionary ideas have not been able to make a dent on this uncontrollable phenomenon of weather. The only achievement is that we are able to predict the moods of Mother Nature but nothing beyond that.

As yours truly was musing about this, the hot wind lashed the face competing with the scorching sun in a tussle that could put any T20 match to the shadows. The endearing smiles of small children on being splashed with water also brought to memory the terrifying screams that are let out by them when the mother tries to give them a bath in the morning. Beads of sweat turned into rivulets and the wish that some technology could convert them to potable water to satiate the thirst dawned in the dimmed wits. The old days of the PM airing the thoughts on drought conditions have resurfaced. The "Neer Sab" who passionately provided water to the parched throats of these very denizens comes into imagery of the ones who inhabited this place in the eighties. 

As these thoughts dominate the sunny landscape, the wait for the visionary dewans of Mysuru or the politician who took his job seriously seems to be worse than the wait for the precious drop of water. The need to replace the concrete wonders being churned out by the builders has only been met with a property tax hike in a city which is gasping for breath. The situation of the summer will compete for better times during the rainfall as the municipal authorities fail to clean up the system. The glimmer of sunshine therefore needs to be taken in full stride as the wait for the redeemer continues!!!