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IAS Officer Who Quit Over Kashmir Issue Stopped From Visiting Pune Varsity Library

Library officials at Savitribai Phule Pune University said that by asking for an application for Kannan Gopinathan’s visit, the institute was merely following procedure.

New Delhi: Kannan Gopinathan, the IAS officer from Kerala who resigned late last month in order to be able to speak freely about the virtual ‘Emergency’ in Kashmir, was on Monday barred from visiting Jaykar Knowledge Resource Centre (JKRC) – the library at Savitribai Phule Pune University (SPPU).

The idea of Gopinathan visiting was dropped after a confrontation between students and library officials.

According to the Indian Express, while the university students wanted him to visit the library, Gopinathan was stopped over “procedural” requirements. Aparna Rajendra, director-in-charge of JKRC, told the daily that by asking for an application for the officer’s visit, the institute was merely following procedure.

“We would have happily shown him the library, but since the reading hall is also used by other students, holding a public talk or lecture there would not have been possible,” Rajendra was quoted as saying. The public lecture, she said, “would have disturbed the other students.”

She further said that the university wasn’t given prior intimation about Gopinathan’s visit. “Visits involving high-ranking officers require official communication made through the registrar’s office. So I advised the students to submit an application for this, which is part of maintaining our record,” she said.

Students, on their part, expressed confusion over why library officials had insisted on an application and claimed that they had behaved rudely.

Also read: ‘This is Not the 1970s’: IAS Officer Quits in Anguish Over Kashmir ‘Emergency’

“The official did not inform us why the application was required. We didn’t know the official procedure but would have followed it. But we were upset at the manner in which the library officials spoke to us,” Kamalakar Chandrakala, a second-year commerce student of SPPU was quoted by Indian Express as saying.

Gopinathan told the English daily that he was visiting the SPPU campus on Monday as part of exploring Pune. The students wanted him to see the library but after the “conversation between students and the library official got into a confrontational mode, we decided not to escalate the matter further and dropped the idea of visiting the library,” he said.

The students then held an informal session with Gopinathan at the Pune university’s canteen.

Last month, Gopinathan had resigned from the prestigious service “in order to speak freely” about the Centre’s actions in Kashmir. “This is not Yemen, this is not the 1970s, that you can deny basic rights to an entire people and nobody will say anything about it,” Gopinathan told The Wire last month.

With New Round of Bank Mergers, Is the Govt Ignoring Lessons From the Past?

The earlier big bank mergers are yet to display the claimed gains, and the 2008 financial crisis shows that size hasn’t been an advantage internationally as well.

The recent announcement of mega public sector banks (PSBs) merger – as expected – has received mixed reactions, depending on the political loyalties of experts and commentators. A lot of din will be kicked up and logically so. The earlier round of bank mergers (Dena Bank and Vijaya Bank with Bank of Baroda) is yet to yield the projected gains as the process is still a work in progress – so much so that even the boards of the merged banks continue to stare at the passers-by, reflecting on the uninformed strategy of the government.

The economy, in any case, doesn’t appear to be the priority. What has happened to the huge non-performing assets of the merged Dena Bank is anybody’s guess. The issue of fixing accountability on the top people who facilitated the questionable loan decisions is not being talked about either.

Stale arguments

The finance minister put forward the now-familiar arguments for the fresh round of mergers: size will help the country compete internationally, it will enhance efficiency, it will help raise capital and it will give a push to the goal of a $5 trillion economy by 2025.

Meanwhile, the earlier merger of five associate banks and the Bhartiya Mahila Bank with the State Bank of India is yet to display the claimed gains. The existing mega-banks like SBI, BoB and Punjab National Bank (PNB) in the state sector and ICICI Bank in the private sector, have themselves been under frequent public scrutiny. As the now over-a-decade-old global financial crisis confirmed, international experience is also not very charitable towards the supposed advantages of size.

After the crisis too, banks like Wells Fargo and Deutsche Bank have exposed how vulnerable the big banks can become. Sadly, our policy formulators have not internalised such lessons.

Also read | Will a Big Bank Merger Help India’s Crisis of Liquidity and Confidence?

Even four years after the package of reforms kickstarted under the incomprehensible acronym ‘Indradhanush‘ by the first Modi government, no tangible improvements or change has been evidenced in the working of PSBs. On the contrary, the following years witnessed a deeper existential crisis. The signals of recovery of the PSBs in the current year are weak when the economy itself is under great meltdown.

Under the circumstances, the major thrust should have been reforming the Augean stables rather than merging the entities.

The uniqueness of banks on the axe

Some of the PSBs now facing the axe on their distinct identities have unique historical backgrounds. Take the two banks hailing from the coastal districts of Karnataka: Syndicate Bank and Corporation Bank. They are part of the four banking gems started in the erstwhile South Canara district of former Madras Presidency. Each one was started by local citizens who had a public concern – Haji Abdullah of Corporation Bank, T.M.A. Pai of Syndicate Bank, A.B. Shetty of Vijaya Bank and Ammembal Subba Rao Pai of Canara Bank.

None of them were industrialists. Their motto was to promote savings habit among the local populace and provide financial help to the needy. That motto struck a deep emotional chord with the people and helped the banks grow steadily, although at a different pace. That explains why Canara Bank and Syndicate Bank were nationalised in 1969 whereas Corporation Bank and Vijaya Bank took 11 more years.

That these banks were born in a remote place in the country, survived several crises in the banking industry – both before and after the Banking Regulation Act, 1949 came into force – and rose to become national players is a tribute to their inherent resilience.

These banks provided the foundation to the all-round development of the coastal districts – the large number of educational institutions, hotels and small enterprises that dot even the interiors of the coast are a testimony to such contribution.

These banks had another uniqueness in the Indian banking map: the coastal South Kanara district had the highest banking density in the country (leaving aside the metropolitan Mumbai, Kolkata and Chennai). They continued to serve the common man despite the temptations of big-ticket business in banking in the large metros or emerging industrial corridors. The four PSBs became a part of the socio-cultural milieu of the west coast.

All these will now be part of history in the new India being built by a dispensation which swears by everything Indian.

Jumping into the unknown?

The latest decision of mergers will no doubt be welcomed by the admirers of a government which does not believe in consultation or learn from experience. This feeling gains currency from the inability of the government to act on the substantive recommendations of one of its own appointees – the learned and knowledgeable Vinod Rai who as head of the Bank Boards Bureau had given a slew of recommendations when he demitted office 18 months ago.

Also read | Will a New Round of Forced Public Sector Bank Mergers Work?

The compendium of recommendations given by him in March 2018 has obviously gone into the archives of the finance ministry. His proposals to improve the corporate governance system in PSBs and manpower reorientation do not appear to have been given serious thought by the government. No doubt the finance minister claims that governance reforms will be achieved through independent recruitment of chief executive officers (CEO) of PSBs. A few PSBs have recruited CEOs from the market in recent years, what is their record of performance in turning the banks around?

As per current practice, now that the finance minister has announced the government’s decision, the boards of the respective banks will meet shortly to pass resolutions seeking ‘voluntary mergers’ and thereafter claim that the mergers are ‘board-driven’. It will leave everyone in the lurch – the millions of small depositors and borrowers, who will be strangers to the new leaders of the mega banks, and the hapless staff.

That was the unfortunate experience when the associate banks were merged with the mega SBI. Before internalising the lessons therefrom and the merger of two banks with BoB during 2018-19, rushing to replicate such exercise shows our unwillingness to see the realities of the financial sector.

How exactly the new effort to create some more mega banks will drive the animal spirit of the economy already struggling under multi-dimensional crisis has not been spelt out. When the basic flaws in the financial sector remain unaddressed, the new mega banks to pump prime a staggering economy is like chasing a mirage.

T.R. Bhat was joint general secretary of All India Bank Officers’ Confederation from 1995 to 2009. His book, Reforming the Indian Public Sector Banks-the Lessons and the Challenges, was released in April 2018.

Will a Big Bank Merger Help India’s Crisis of Liquidity and Confidence?

The mega merger announcement can’t achieve desired results without accompanying reform on a number of fronts.

The new government has barely settled down and it suddenly appears that every day brings with it a new package of ‘reforms’ or policy announcements to address the economic slowdown that India is grappling with.

After the finance minister announced a set of new measures last week to address some existing supply-side bottlenecks and credit concerns affecting core sector growth, there were new changes made to the foreign direct investment (FDI) cap limits across various sectors (to crowd in foreign investment). And now, we have another mega announcement – the merging of ten public sector banks into four big banks.

In some ways, the pace at which such announcements are coming is both an acknowledgement and a statement on the severity of India’s current economic situation. It is also a telling remark on how the economy has been handled over the last few years; even if some of the current concerns, especially those relating to lower productivity and export demand, are connected with the general global economic atmosphere.

Business and investment cycles are functions of confidence-cycles. Confidence, or the lack of it, has a multiplier effect in an economy, which is connected with the further generation of more opportunities for private investors and firms.

Ever since the collapse of infra-finance operator, the IL&FS group, last September, the Indian economy has been battling with a serious crisis of confidence and a severe liquidity crunch – a squeeze of the type where even public sector banks are simply unwilling to dole out credit without reclaiming or dealing with existing bad debts (or NPAs). The situation is worse for NBFCs (Non-Bank Financial Corporations) that provide more credit to small and medium scale enterprises than banks.

The big bank merger announcement needs to be viewed in this light.

Also read | Centre Announces Sweeping Plan to Merge 10 Public Sector Banks Into 4 Entities

The announcement calls for four new mergers now. The first will see Punjab National Bank, Oriental Bank of Commerce and United Bank of India combining to form the second-largest bank now after the State Bank of India (SBI). The second will see Canara and Syndicate Bank amalgamate into one. The third will have Union Bank of India merge with Andhra Bank and Corporation Bank. And finally, Allahabad Bank will merge with Indian Bank. After this, the total number of state-run lenders in India will come down to 12, from the earlier 27 that existed back in 2017.

A welcome announcement here is in relation to how six existing PSU banks (Bank of Maharashtra, Punjab and Sind Bank, UCO Bank, Indian Overseas Bank, Bank of India and Central Bank of India) will be independent or operate as separate entities.

What this should ideally do is enable these banks, that otherwise worsen their lending patterns or accrue bad debts, to be allowed to turn insolvent or bankrupt. Having said that, most of these banks are those with a strong regional focus and would require a fundamental restructuring (in their lending approach) to improve their balance sheets. The introduction of IBC has definitely improved the corporate borrowing scenario and will yield positive steps – if the implementation of the Code continues to be swift.

But what does this particular big-bank merger announcement signify?

For its signaling effect, the merger, as the finance minister mentioned, may allow an enhanced risk appetite for these institutions, and may make it slightly easier for the government to coordinate and push for re-capitalisation of these banks, as it targets to assign funds out of the surplus funds (Rs 1.76 lacs crores) received from the Reserve Bank of India (RBI) a few days ago.

At the same time, it also makes merged banks to fall under the ‘too big to fail’ category – something that is also seen with other large credit-fueled economies, including the state-owned financial banks of China and private banks of the US.

The ‘too big to fail’ concept centres around an idea that certain institutions remain so vital to the economy that they cannot be allowed to fail under any circumstances, owing to the damage they would cause to citizens and the national economy. The government usually bails these institutions during times of crises and this has been observed more frequently in cases of sovereign bank defaults seen in countries like the US (last seen during the 2007-08 crisis).

Also read | In Boost to Modi Govt, RBI Agrees to Make Record Rs 1.76 Lakh Crore Transfer

In the Indian context, not only would the NPA ratios of merging banks add up to a larger number for the anchor bank institution now, but it would now also require the government and the RBI to be more vigilant in times ahead to monitor ‘risk of default’ for these big banks. This must be done to avoid a situation where the government is called to bail out any of the big banks from its already restricted fiscal space. Increased space and ease for credit mustn’t lead to an exacerbation of financial debt, as seen in China.

One also doesn’t know how marginal cost of funds-based lending rates (MCLR) would be synchronised post the merger, especially at a time when transmission process in rate cuts (between RBI and PSBs) has remained a constant problem in ensuring policy benefits to actual customers. Last week, the finance minister emphasised the need to have a more improved coordination transmission rate mechanism to ensure a direct harmonisation between monetary policy cuts announced by the RBI and its linking to actual borrowing rate cuts of public sector banks.

As of now, eight state-run lenders have already announced repo-rate linked loans. If handled well, a bigger bank network (with fewer anchors) can ensure a better transmission process.

More importantly, politically-speaking, the move seems to also be positioned in tandem with the prime minister’s vision statement of a $5 trillion economy.

But would a merger help in addressing the larger crisis of confidence?

Also read | Latest GDP Growth Figures Raise Questions About State of Indian Economy

The answer to this lies in how well the government treats the public sector banks going forward, including the big merged banks. So far, the history of Indian governments dealing with public sector banks and their lending mechanisms has been dreadful. The current state of most debt-ridden PSU banks – especially those with a regional or state focus, can be largely owed to the interventionist approach undertaken by the governments through greater bureaucratic influence and from the persistent election cycle of announced loan waiver grants.

Going forward, the Modi government, despite its over-centralised approach to the economy’s management, may perhaps learn from its own errs and those of its predecessors by gradually turning existing PSU banks and the big merged banks into different forms of independently managed special purpose vehicles. This, for one, can help the respective bank-management boards to exercise greater operational and functional autonomy and also make them target specific directional areas for credit transfers. Especially in areas of agri-business, housing, infrastructure, textiles, renewables and so on where there is dearth of cheap and swift credit.

Deepanshu Mohan is an associate professor and director, Centre for New Economics Studies at O.P. Jindal University. He is a visiting professor to the Department of Economics, Carleton University, Canada.

Death Toll Rises to 22 As Heavy Rains Lash Kerala

Red alert has been issued in nine districts with the worst affected being Wayanad, Malappuram, Kannur and Idukki.

Thiruvananthapuram: As heavy rains continued to batter various parts of Kerala, 22 people have lost their lives with over 22,000 people being shifted to relief centres.

Red alert has been issued in nine districts with the worst affected being Wayanad, Malappuram, Kannur and Idukki.

Chief minister Pinarayi Vijayan, who chaired a high-level meeting Friday morning to review the situation, told reporters that 22 people have died in the heavy rains in the last three days.

Landslides and mud-slips have been reported from 24 places, he said.

“In Mepaddi in Wayanad, which witnessed the biggest landslide on Thursday evening, the area between two hills areas was completely washed away,” Vijayan said.

The government has sought the assistance of the Indian Air Force.

Personnel of the NDRF, Police, Fire force and Forest officials are engaged in rescue operations.

Meppadi in Wayanad and Nilambur in Malappuram are among the worst-hit areas, he said.

To help in the rescue operations, 13 teams of NDRF personnel and around 180 Army officials have already reached the state.