This refers to the report "Banks bow to RBI pressure" (April 8). It is interesting to see that three leading commercial banks cut their base rate suddenly after Reserve Bank of India (RBI) Governor Raghuram Rajan warned them for transmitting the benefits of the earlier repo rate cuts, which they were resisting. It is a fact that the RBI monetary policy review is awaited anxiously by the corporate world, government and public, as it affects their planning for various types of loans. That makes loans cheaper or costlier, depending on the quantum of increase or decrease in the repo rate at which the banks normally take money from the RBI. But it is surprising that banks refused to cut rates on Tuesday after the announcement of the monetary policy by the RBI, saying that their respective asset liability committees (ALCOs) would take a call on a rate cut in due course. They vehemently denied that the cost of funds had reduced after two previous repo rate cuts by the RBI.But within a few hou

Letters: The idea behind rate cuts

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This refers to the report "Legitimate demands not tax terrorism: FM" (April 7). While the government is moving fast with reforms, greater significance needs to be given to promote domestic savings, investments and inflow of foreign institutional funds. This requires an investor-friendly tax system, which must be easy for the taxpayers to comply with. We need to revisit our tax system and structure to look for reforms to augment the propensity to save and invest. Besides, the tax structure should be transparent and authorities must aim to levy taxes without any chance for corruption, favouritism and disputes.V S K Pillai  KottayamLetters can be mailed, faxed or e-mailed to:The Editor, Business StandardNehru House, 4 Bahadur Shah Zafar MargNew Delhi 110 002Fax: (011) 23720201E-mail: letters@bsmail.inAll letters must have a postal address and telephone number

Letters: Domestic savings

Manas Datta

The policy does not come as a surprise. The unseasonal rains across the country, leading to crop damage, have evoked inflationary concerns and influenced the regulator's decision. Of course, the status quo on interest rates does not help as liquidity is available but not at a price companies are willing to pay for. Banks have not reduced their base rates in at least the past nine months and these continue to be at 10 to 10.5 per cent. This has held back credit offtake.While the regulator is following the process of inflation management, a more pragmatic approach is needed to ensure that the entire credit offtake does not come to a standstill. At this rate, India Inc will be compelled to hold back fresh capital expenditure. Companies are already venturing out and borrowing overseas at interest rates below three per cent wherever external commercial borrowing regulations permit. Someone has to take a call on how Indian firms can raise money at a reasonable price. After all, what is the p

Pragmatic approach needed: Manas Datta

Arundhati BhattacharyaChairman, State Bank of IndiaThe policy decision was on expected lines. However, with the central bank expecting inflation to remain at subdued levels between now and August, front-loading a repo rate cut may be an option. According to RBI estimates, the CPI-based inflation is expected to remain at current levels in the first quarter of 2015-16, moderating to around four per cent by August but firming up to 5.8 per cent by the end of the year. The central bank batting for more retail participation in the G-sec market is a welcome move. Although the G-sec market is predominantly institutional, RBI has initiated several steps to promote retail/individual investments such as the introduction of the non-competitive bidding scheme. Allowing issue of rupee bonds will facilitate internationalisation of the domestic currency.  Allowing cooperative banks to issue credit cards and setting up ATMs is a step in the right direction in enabling a seamless access to bank finance

BS Jury on RBI's 1st bi-monthly monetary policy, 2015-16

RBI's message regarding the delay in transmission of its earlier rate cuts was taken by banks almost immediately

Potential gainers

RBI policy in 2 minutes

The earlier two repo rate cuts of 25 basis points each in January and March 2015 had not resulted in any corresponding reduction in banks' base rates. As a result, highly-rated large corporates have borrowed at very competitive rates from the debt and money markets, where the transmission of the policy rate cuts has been much more forthcoming. The proposed RBI recommendation for banks to move in a time-bound manner to marginal cost of funds-based determination of their base rates, is a welcome change. It will result in better and quicker transmission of policy rates into banks' lending rates.Another interesting proposal is the possibility of Indian companies being permitted to raise money through external commercial borrowing via issuance of rupee-denominated bonds in international markets. This will effectively transfer the hedging risks to the investor, as opposed to the issuer, and will help develop bond market. The move could also reduce RBI's concerns with respect to burgeoning fo

Quicker transmission of rate cuts: Sam Ghosh

After Tuesday's dovish policy, we expect Reserve Bank of India (RBI) Governor Raghuram Rajan to cut rates by 25 basis points on June 2. Looking ahead, RBI will likely pause after June to monitor the US Federal Reserve's rate actions in September. Another cut of 50 basis points can be expected in early 2016.We continue to pencil in another 75 basis points of policy rate cuts in the next 12 months, with inflation trending well below RBI's below-six per cent target. Although winter rains could pose a temporary upside risk, Delhi will likely prefer to respond with supply measures rather than RBI action. We think concerns over "transmission" are overdone. Can banks cut lending rates in the peak February-March busy season? With the slack season setting in, lending rates should come off by 25 basis points. That said, RBI will also need to step up reserve money expansion to engineer softer lending rates to push up credit offtake. Finally, RBI will likely continue to buy FX to guard against any

Transmission concerns overdone: Indranil Sen Gupta

A study by Institutional Investor Advisory Services (IiAS) says returns from investing in Initial public offerings (IPOs) have been dismal over 10 years. About 60 per cent of investors lost money, it concluded.IiAS' analysis of 394 IPOs between April 1, 2003 and July 31, 2014, showed only 164 companies or 42 per cent currently trade above the offer price. Further, in 20 per cent of this set of companies, investors would have made higher post-tax returns by investing in fixed deposits rather than these IPOs. This analysis is being made during a bull run - markets have moved up 30 per cent in the past year. Were this analysis based on market prices a year ago, 245 or 70 per cent of companies would have been quoting below their offer price, the study said.

Investing in IPOs: A Game of DICE

Policy transmission through fiat may be regressive

RBI puts onus on banks

Take the right steps to fix urban air quality

Breathing in disease

The Congress party never loses an opportunity to hit out at the rural development minister in the Narendra Modi-led government, Birender Singh, perhaps because he quit the Congress to join the Bharatiya Janata Party last year. Just the other day, while lashing out at the government's so-called "double talk" on the land acquisition Bill, a senior Congress member wondered aloud if Singh had any voice at all in the issue. "Why is he, the minister concerned, silent while Nitin Gadkari, ostensibly the transport minister, so voluble on the land Bill? After all, Birender Singh spoke about incorporating a diluted consent clause if need be, but none of that has happened. Obviously, his views don't count in the party and in the government," said the Congressman smugly.

Troubled land

If the 'Janata family' comes together, can the Congress be far behind? As talks about a possible merger of the six offshoots of the erstwhile Janata Party gather momentum, Congress General Secretary Digvijaya Singh urged "all former Congressmen and women", people who had faith in the Gandhian and Nehruvian ideology, to "come together". Speaking to the media recently, he became philosophical: "In the ultimate analysis, what is politics? It is after all an ideological battle. We have to come together and decide the ideological direction of the nation," he said.

Politics: A concerted effort?

The position of chief information commissioner has been lying vacant since August last year, following the retirement of Rajiv Mathur. The positions of two other information commissioners have also been vacant for over six months now. Top-ranking government officials say though there are over 500 applications for these three positions, the Prime Minister's Office may not select candidates to fill up these positions from this pool. The decision will likely swing in favour of officials who are "qualified" but have not applied for the position, they say.

The right candidate

This refers to Vinayak Chatterjee's column "Trust deficit in land acquisition" (Infratalk, April 7). While he has quoted pertinent data on how the existing land acquisition law has worked against the interests of the poor and the tribal people, he has not considered two other related issues: the fundamental right to property and that the ruling economic dogma extols the virtue of the market and least state interference in economic matters, which means a willing buyer and a willing seller.As far as having a commission is concerned, if we look at the past experience of choosing impartial, independent and objective members in various commissions, boards and regulatory authorities, one does not get any comfort that the composition will be flawless or not be subject to judicial challenge. There is, however, a bigger worry. A commission will take a case-by-case approach, which brings in discretion. As an example, all new projects, even a shopping mall, Formula One racetrack or a casino, will

Letters: Land rights

In his article "India's economic theory fashion cycles" (April 7) Ajit Balakrishnan overlooks the repeatedly demonstrated inability of the Indian public sector units (PSUs) to compete with the Indian private sector on a level playing field. BSNL pays its linemen Rs 35,000 plus per month when its private sector counterpart pays (its much younger) employees Rs 15,000 for three to five times as much value addition. So, BSNL is inherently uncompetitive irrespective of whether particular pension liabilities are funded by the government or not.Only a careful mixing of sectors where PSUs are dominant monopolies along with others can show PSUs performing better than the private sector.Alok Sarkar  KolkataLetters can be mailed, faxed or e-mailed to:The Editor, Business StandardNehru House, 4 Bahadur Shah Zafar MargNew Delhi 110 002Fax: (011) 23720201E-mail: letters@bsmail.inAll letters must have a postal address and telephone number

Letters: Believing in PSUs

This refers to the report "Black money: Switzerland ups vigil as India threatens criminal action" (April 7). It is well known that tax havens are responsible for corruption in India and other less developed nations because they offer a safe haven for depositing this ill-gotten wealth. When the US threatened major Swiss banks, they not only disclosed the names of tax evaders but also willingly paid the fines. In the changed international outlook, Switzerland's strict banking secrecy has been under assault from fraternal countries such as Germany and Britain like never before. Deposits in Swiss banks have increased in recent years but mostly from the burgeoning economies of Asia even as Western European money has been withdrawn. With the recent high-decibel statements on secret Swiss and offshore accounts quite a few billion might have been moved to other accounts.H N Ramakrishna  BengaluruLetters can be mailed, faxed or e-mailed to:The Editor, Business StandardNehru House, 4 Bahadur Sha

Letters: Black money action

A few key takeaways from the Reserve Bank of India's first bi-monthly monetary policy statement for 2015-16

Infographic: Walking the inflation tightrope

AAP 49 days in 2014 with AAP 49 days in 2015

Then and now: 49 days of an AAP government

Things you need to know about the Reserve Bank of India's monetary policy actions

BS Quiz: Test your grey cells on RBI's monetary policy

The party's move towards the political centre

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