Rest in Peace George Fernandez, You will be missed!

                            India's best Defence minister & socialist leader George Fernandes dies at 88.

I wanted to pay my tributes to the George and share some great moments of his life which really made him true leader and a man of true character.

We all know that he was the Defence minister in NDA 1 and during his tenure we won the Kargil war. But not many of us know that he once took on the mighty Coca cola and IBM in 1977 he kicked them out of India? Yes true, He was also once Industries Minister!! Can you believe it? an staunch socialist getting Industries ministry? Obviously sparks had to fly and it did. True to his socialist ideology he should best be remembered for his speeches in Lok Sabha which lasted for 2 hrs arguably the best one, after the famous Vajpayees and Pramod Mahajans no confidence motion speech in 1998.

Do read this long article which I bridged it for you all, it’s the best speech you would ever get to hear again in this lifetime. So the year was 1998, BJP was single largest party and NDA was the strongest alliance in Loksabha. Vajpayee was elected as the PM. Confidence motion was put before the house. Congress and CPM had joined hands to vote against NDA government. Leaders of both parties were sitting together and attacking BJP NDA . Whenever Congress leader spoke, the CPM leaders were thumping the desks and vice-versa. Whenever a leader from NDA was attacking Congress, leaders from CPM would counter attack very fiercely. All 'secular' forces were united to dethrone the Vajpayee government. Veteran leader George Fernandez was defending the government.

He said “Speaker sir, I want to inform you what a strong organisation has to say something on Congress party". He took out a book while speaking

"Congress party is the fountainhead of corruption...(big shouting from congress benches)...The British left and the Congress party replaced them. Over the past 50 years, Congress has established ever new records in corruption. (Again big shouting from congress)

Congress ministers have often been found embroiled in several scams, including Mundra scam, Churhat Lottery scam, Bofors scam, Sukhram scam, Harshad Mehta scam, JMM Bribery scam and Hawala, that took place during its regime.

Congress has corrupted and misused every institution of the Indian democracy." At point, both Congress and CPM got charged up and said "Speaker sir! Please ask the honourable member to name the source, We can't allow him to read from any unnamed document. Please restrain him

George Fernandez said "Please don't get impatient. I'll definitely name the source. But first let me complete what it says. It says, "The Congress party's record on Secularism too has been chequered. At various times in history, Congressi goondas took active part in riotsand killed people. 3000 Sikhs were butchered by them on streets of Delhi and prime minister Rajiv Gandhi watched it silently." Big shouting and noise again from benches of Congress and CPM. George Fernandez, "Just give me two minutes...and then I'll reveal the source”

He continued to read from book "Speaker sir, it says, "No country in history has ever progressed with bad governance and excessive corruption as partners. None! The Congress suffers from this twin ailment since decades. Its survival is detrimental to the progress of India.

Therefore, in the interest this nation, it's important that Congress party is wiped out from this land for ever." Big shouting and noise again from benches of Congress and CPM.

"Speaker sir! It cannot go on like this. We will not allow him to speak any further if he doesn't give the source he is quoting from." "Ok, Ok" said George , "There is more to read. But since our friends from Congress and CPM are so desperate to know the source, let me tell you what I am reading from... ...I'm reading from the Manifesto of CPI(M) issued just before these Lok Sabha elections." Pin drop silence in the house. Leaders from Congress and CPM were starring each other..

George , "What happened, why silent ? You were shouting we want to know the source, we want to know the source. Once you heard the name of the source, your voices were mute. Shame on your selves ! Definitely you should be ashamed ..

My friends from the Left! Either you don't read your own manifesto or you don't mean a word of it. In either case, you should be ashamed of yourselves. In the name of secularism, you have joined hands with Congress that has broken all records in corruption.

I urge you to introspect to determine your future course of action. And if you do not mend your ways, your party will become history, sooner rather than later."

Rest in Peace George Fernandez, You will be missed! 

Every time a Rape/Crime happens, prices of Tea & Coffee increases!!

You must be wondering what has Rape or for that matter, any crime got to do with the price we pay for Tea or Coffee. Yes, there is a relation and let me explain how.
We (India) are an emerging economy and one of the many parameters of measuring growth is the percentage of women in the workforce and according to this data from the world bank, About 24.5% in India (For the year 2017), 45.2% In China and  44.3%  in the USA of women are part of the workforce there are 210 countries way ahead of us, and if I remove African and developed countries  some of our neighbors fare better than us for example (though our economies are not the same) Vietnam, Myanmar, Bhutan, and Sri Lanka . (The data is available on world banks website) so, the reason why I am giving this stats is that as we know the more the women in the workforce the faster is the overall development of the society and economy and because of these crimes and fear of it happening women don’t come out to work. So the last time a rape happened from the shameful Nirbhaya case in Delhi, Kathua, Guru gram etc what was the typical reaction of the people or the government?  Don’t go out after 6 or 7 in the evening, hire more security, have GPS in cabs, pick and drop facility, company provided cabs for odd hours drop, and various other security measures and mind you these services don’t come for free. So, imagine when the CEO or HR of any organization looks at the cost of employing women what would come in his/her mind?? Don’t employ women! That is the net reaction. So the economic downside of a single rape or any crime is paid by the entire society and the cost structure starts shooting up and we don’t even realize it. And in a country like India where there is a huge population from the rural India who are migrating to urban cities it has a multiplying effect. The cost structure keeps on increasing from say the tier 3 to tier 2 to Metro cities being the highest. So the cost is now amortized by employing women in newer cities like Gurugram, Noida, Jaipur, Pune etc. so when a crime happens in these cities women stop getting into the workforce, parents are reluctant to send their kids to other cities stop living in PG, Rented houses etc so the local economies have come to abrupt or complete halt and it’s all because of this one rape which is statistically speaking ignorable but the effect of it on the economy is so huge that we end up paying personally. Each time you check into the mall, star hotel, airport, etc the cost of maintaining the guards at the doors, mirrors, scanning machines, metal detector, CCTV, and many more gizmos that cost is added to the cost of that tea or coffee, alcohol, cigarette, food etc. we have to pay for it, no one would pay for it. Although the women who are raped, a person shot in Taj or CST may or may not be our relative or near and dear we do end up paying for it economically.
While we are happy that no major terror attack happened in India since 2014, but it would be foolish to say that we are not suffering its after effects, from paying extra for that cup of tea, frisked at every mall, airport, cinema we are terrorized it has gone into our psyche, Taj gets bombed increase security of star hotels, Cinema gets bombed do the same, school, bus, railways, planes etc. we forget the cost that we end up paying otherwise. This is causing a huge dent to the economy in the way that we or any country would raise more and more policemen, RAF, CRPF etc. which are non-productive (I mean these guys do a great service to the nation but economically they don’t add value or produce any economic value) so each time a crime, rape etc. happens we are moving more productive people out of the productive workforce to protect or safeguard the society or the nation thereby increasing the load or adding on the cost on to the lesser productive people , so all those young men holding guns are out of the productive force who probably would spend the entire life 20-30 years not adding any economic value. The time to do business now has gone up the waste of time at each mall, airports, time that jets waste due to security clearance, when you enter the office and asked to show the bag, etc. its wasteful expenditure of money as well as precious time. And this would go on forever and probably after the next attack, rape we might have to go through more checks. So what is happening is these incidents are slowing the economy, increasing non-value add expenditure, waste of time, take more men out of productive workforce into non-productive (so in one way Pakistan is not only killing our men but also harming our economy)
So what is the way forward? I am currently reading this book by George Kelling who introduced the theory broken windows and he says “consider a building with a few broken windows. If the windows are not repaired, the tendency is for vandals to break a few more windows. Eventually, they may even break into the building, and if it's unoccupied, perhaps become squatters or light fires inside.
Or consider a pavement. Some litter accumulates. Soon, more litter accumulates. Eventually, people even start leaving bags (Bangalore is the best example) of refuse from take-out restaurants there or even break into cars. He talks about crime and its relation to strategy to contain or eliminate crime from urban neighborhoods
A successful strategy for preventing vandalism, according to him, is to address the problems when they are small. Repair the broken windows within a short time, say, a day or a week, and the tendency is that vandals are much less likely to break more windows or do further damage. Clean up the sidewalk every day, and the tendency is for litter not to accumulate (or for the rate of littering to be much less). Problems are less likely to escalate and thus "respectable" residents do not flee the neighborhood.
Though police work is crucial to crime prevention, the presence of police authority is not enough to maintain a safe and crime-free city. People in the community help in crime prevention. He proposes that people care for and protect spaces they feel invested in, arguing that an area is eventually safer if the people feel a sense of ownership and responsibility towards the area. Broken windows and vandalism are still prevalent because communities simply do not care about the damage. Regardless of how many times the windows are repaired, the community still must invest some of their time to keep it safe. Residents' negligence of broken window-type decay signifies a lack of concern for the community. He also says this is a clear sign that the society has accepted this disorder—allowing the unrepaired windows to display vulnerability and lack of defense.  The theory thus makes two major claims: that further petty crime and low-level anti-social behavior is deterred, and that major crime is prevented as a result. Criticism of the theory has tended to focus disproportionately on the latter claim. 

Not just a Bharat Ratna!

ना हार में,

ना जीत में,

किंचित नहीं भयभीत मैं,

कर्तव्य पथ पर जो भी मिले,

ये भी सही वो भी सही - अटल बिहारी वाजपेयी

He came, He saw, He conquered our hearts by his oratory, his exemplary behaviour, his statesmanship par excellence. That was our Atalji. There can never be a personality like Atalji. I am one of the millions who deeply mourn for his passing away. Right now I am feeling the same as I felt on 14-Mar-2004, I remember that day because that was one of the most disappointing and saddest day of my life. BJP lost the elections despite the stellar economic performance and giving a stable non Congress government ever. The elections of 2004 also resulted in the end of the political life of the finest PM we had. This is tribute and a balanced appraisal of Atalji, The Golden Quadrilateral project, envisioned and executed by his government, contributed significantly to solidify his positive legacy. Policy innovations of Vajpayee’s government sparked off India’s telecom revolution, sarva sikhsa abhiyan, victory in kargil, During Atal ji's time, India saw an Earthquake, 2 Cyclones, worst Drought in 30 years, Oil crisis, USA sanctions, Yet GDP didn't falter in his time.  And to his credit, he sagaciously ran the first successful coalition government of India – onerous task given that the NDA comprised fractious parties with divergent agendas.

By choice and conviction, the Vajpayee-led NDA was perhaps the only time India had a government ideologically committed to right-wing economics. Many distinguished economists credit his government’s economic policies for India’s sustained GDP growth rate of over 8 per cent from 2003-2007. Under the NDA government, companies were privatised via strategic sale, taxation was rationalised, foreign exchange rules were relaxed, capital markets and insurance reforms were executed and the government even proposed to privatise PSU banks and liberalise India’s strangulating labour laws. Plans to privatise Air India and the oil marketing companies could not materialise – had they succeeded, the national exchequer would have saved several trillion rupees. 

These were just a few which are coming out of my memory. When the NDA Govt under ABV spoke about a 8% + Growth - The Oped specially the Economist, The Hindu and Indian Express were vicious and Sonia Gandhi actually called it Mungerilal Ke Sapney - Another matter that GDP Growth rate in 2003-2004 hit 8.52% and all good work capitalised by UPA Govt later and squatted away and the gains scammed away.

India's biggest misfortune was NDA loss in 2004. It allowed Congress to benefit from Vajpayee's hard work and claim credit.

May his soul find place in the lotus feet of the almighty!

1,200,000,000,000 Trillion Rupees was written off by all PSU in 2017-18. Are we staring at a banking crisis??

Public sector banks accounted for over 85% of total frauds reported in the banking system in 2017-18, according to the RBI’s financial stability report (FSR). The banking system reported 6,500 frauds, amounting to more than ₹30,000 crore.

Yes, in 2018 we are getting to learn how poor the PSU banks are regulated, pathetic internal controls, poor IT infra, and least to say the this raises serious questions on how these banks are governaned?

The NPA mess is the biggest scam that the UPA Government has given in legacy to the NDA . 

Indian Banking sector, especially the state-owned banking segment, is under severe stress with mounting bad loans and an increase in bank fraud, among other issues. More than half of the listed state owned banks that account for about 20% of overall system advances are already under Prompt Corrective Action (PCA) framework, and a few more are expected join the list soon.

The non-performing assets (NPA) situation in the banking sector is alarming. At least 15.8% of the total loans in the banking sector are tagged under the stressed asset category. The nudge from RBI to clean up the system has shown the actual depth of the trouble on the books of Indian banks (hidden bad loans).

State-owned banks have already reported record level of bad loans resulting in huge cumulative losses of about Rs.55,000 crore in financial year (FY) 18 (reported thus far). Recent capital infusion of about Rs.88,000 crore was too little and too late.

The passage of the bankruptcy law was definitely a major step in the process of overhauling the banking sector. But the task is half-done yet. It needs to be well-supported by other comprehensive reforms in the sector such as adding more judicial muscle to NCLT; incentivizing faster resolution of NPAs through ARCs; reviewing ownership, control and governance issues of state-owned banks in the long run.

Bashing our banks, particularly the government-owned ones, which roughly have 70% market share of assets, has become a favourite pastime for many. Instead of going deep into the causes of deterioration in health and the possible remedies, let’s focus on some of the vital statistics to get a sense of the state of affairs in the ₹150 trillion banking system in the world’s fastest growing large economy.

Public sector banks (PSU banks) have written off non-performing assets (NPAs) worth Rs1.20 trillion, an amount that is nearly one-and-a-half times more than their total losses posted in 2017-18, according to official data. This is the first time in a decade that banks have made huge write-offs on bad loans while booking hefty losses.

A write-off means that the bank has made 100% provision from its earning against that account. This NPA is no longer part of the bank’s balance sheet.

The Table below gives the broader picture of the Gross and Net NPA of PSU and Pvt Banks. (Data taken from official RBI site) (Amount in Millions)

NATIONALISED BANKS	Gross NPA			Net NPAs
Bank	As on March 31 2017	Write-off during the Year	As on March 31 2018	As on March 31 2017	As on March 31 2018
STATE BANK OF INDIA & ITS ASSOCIATES	1219686	278388	1778106	688944	969322
ALLAHABAD BANK	153846	24421	206878	102925	134335
ANDHRA BANK	114436	16231	176700	60357	103548
BANK OF BARODA	405210	45156	427187	194065	180802
BANK OF INDIA	498791	72306	520445	279964	253050
BANK OF MAHARASHTRA	103859	13571	171887	69193	112296
BHARATIYA MAHILA BANK LTD.	14	-	550	7	462
CANARA BANK	316378	55448	342020	208329	216490
CENTRAL BANK OF INDIA	227210	23960	272510	132420	142180
CORPORATION BANK	145443	35737	170452	91601	116922
DENA BANK	85605	8334	126187	52305	77351
IDBI BANK LIMITED	248751	28682	447526	146434	252058
INDIAN BANK	88270	12254	98651	54194	56066
INDIAN OVERSEAS BANK	300486	29540	350983	192126	197493
ORIENTAL BANK OF COMMERCE	147018	23083	228593	99322	141178
PUNJAB AND SIND BANK	42291	4906	62976	29495	43751
PUNJAB NATIONAL BANK	558183	92051	553705	354226	327021
SYNDICATE BANK	138322	12707	176093	90149	104110
UCO BANK	209077	19339	225410	114436	107034
UNION BANK OF INDIA	241709	12637	337123	140259	188321
UNITED BANK OF INDIA	94710	7137	109520	61107	65919
VIJAYA BANK	60271	10683	63818	42768	41182
NATIONALISED BANKS	4179879	548183	5069213	2515681	2861567

PRIVATE SECTOR BANKS	Gross NPA			Net NPAs
Bank	As on March 31 2017	Write-off during the Year	As on March 31 2018	As on March 31 2017	As on March 31 2018
AXIS BANK LIMITED	60875	22221	212805	25221	86266
BANDHAN BANK LIMITED	188	312	863	102	612
CATHOLIC SYRIAN BANK LTD	4469	1393	6001	3452	4476
CITY UNION BANK LIMITED	5120	1635	6820	3232	4083
DCB BANK LIMITED	1974	444	2542	975	1244
FEDERAL BANK LTD	16678	2364	17271	9500	9412
HDFC BANK LTD.	43928	23859	58857	13204	18440
ICICI BANK LIMITED	262213	121919	421594	129631	252168
IDFC BANK LIMITED	30583	0	15421	11390	5765
INDUSIND BANK LTD	7768	4655	10549	3218	4389
JAMMU & KASHMIR BANK LTD	43686	8570	60000	21640	24254
KARNATAKA BANK LTD	11804	4580	15816	7955	9747
KARUR VYSYA BANK LTD	5112	2638	14838	2162	10335
KOTAK MAHINDRA BANK LTD.	28381	4223	35786	12620	17181
LAKSHMI VILAS BANK LTD	3913	915	6402	2316	4184
NAINITAL BANK LTD	1210	6	1643	277	395
RBL BANK LIMITED	2081	687	3568	1244	1899
SOUTH INDIAN BANK LTD	15624	738	11490	11853	6746
TAMILNAD MERCANTILE BANK LTD	4189	2438	6486	2007	3819
THE DHANALAKSHMI BANK LTD	4589	1890	3156	1932	1665
YES BANK LTD.	7490	1421	20186	2845	10723
PRIVATE SECTOR BANKS	561874	206907	932092	266774	477802

Till 1969, the State Bank of India (SBI) was the only bank that was not privately owned. It was called the Imperial Bank before its nationalisation in 1955. There were primarily two reasons why the ownership of these 14 banks was transferred to the government. The first was the unpredictable manner in which these functioned as private entities.As this report in The Economic Times points out, there were 361 private banks which "failed" across the country in the period from 1947 to 1955, translating to an average of over 40 banks per year. More often than not, this resulted in depositors losing all their money as they were not offered any guarantee by their respective banks.

Second, these commercial banks were seen as catering to the large industries and businesses. Agriculture, as a sector, was largely ignored by these banks

So What Benefits Did Bank Nationalisation Promise? In 1969 only depositors lost money in 2018 tax payers money is literally flushed down the drain by these so called Nationalised bank.

In light of these circumstances, the stated motive of this measure was to make credit availability easy for what was called the “priority sector” – constituting agriculture, small industries, traders and entrepreneurs. Moreover, the focus was also on opening up of bank branches in the rural and backward areas.

Even as frauds and murky dealings continue to tumble out of the closets of the biggest names in Indian banking, there is danger in assuming that the problem is restricted to that industry.

India’s banking crisis isn’t just about the likes of Punjab National Bank, Bank of Maharashtra or ICICI Bank Ltd. India’s corporate sector, including some of its largest companies, is as much a part of the toxic environment that is now unravelling before us.

There are scores of reasons for the appalling performance of the banks some of the prime reasons  are

Political appointments; Majority  of the CMD, Directors in the PSU were all political appointee who would open the bank treasure on one phone call from the south block!  How can a scam of Nirav Modi go untraced for 4-5 years when there are 3-4 types of audits which happen every year? Definitely one rouge manager in some branch of Mumbai cannot pull off the scam of a millennium!

Corrupt Finance Minister; P Chidambaram who now is running from one court to other seeking bail for himself and his family members the moment he completes taking pot shots at the Modi govt. This guy is was cheap and corrupt that he ordered Canara Bank to change its logo and sign board and in turn he made a cut off the total amount spent on money spent on doing the overhauling the signboard etc. One can gage how the finance of the country were handled during UPA 1&2

Every Indian company, large and small, has at some stage put pressure on bankers to bend the rules either for sanctioning loans or changing the repayment terms. Even as we rail against the executives and the boards of the banks for conniving with borrowers, let’s not forget who they were conniving with and for what.

Whether it is Rotomac or Nirav Modi, the script remains unchanged. Banks have always been a fertile ground for political and corporate patronage.There’s nothing new about this. For decades, money in the banks has been treated as the personal fiefdom of a few.

In the 1980s, there were the notorious loan melas, where politicians doled out funds through nationalized banks without bothering about basic hygiene factors. Often, even the loan application forms would be filled by bank staffers.

Post 1991, with the onset of private banking, it was expected that more care and caution would be exercised. But as the Indian economy moved into high gear following a global surge in growth, Indian companies suddenly acquired a voracious appetite for bank loans to fuel their many ill-conceived investments.

Significantly, once the easy-money regime changed, particularly after Raghuram Rajan turned the central bank’s lens on the lending and provisioning practices of the banks, Indian companies’ appetite for investments also dried up.

It is one thing to plan ambitious projects or large acquisitions with the reassuring backing of soft loans at nominal rates of interest and flexible repayment terms and quite another to do so on more stringent forms of financing.

The returns needed to service a bank loan are different from those needed to service any other form of financing. 

Not surprisingly, after 2010, there has been a decline in the share of gross capital formation (GCF) in GDP, from 38.2% to 32.3% between 2011–2012 and 2013–2014, with the corporate sector’s contribution as GCF also

If banks have failed to judge the creditworthiness of the companies they have lent to or failed to detect those initial signs of stress before a loan turns non-performing, it is in part because of the elaborate efforts companies make to window dress their accounts.

When the chairman of Syndicate Bank is arrested for taking a bribe from the promoters of Bhushan Steel, both are equally culpable and deserve opprobrium.

But when Bhushan Steel becomes the norm for corporate behaviour and a symbol of the manipulative power of our largest companies, it is time to worry.

By cornering an abnormal share of bank loans, large Indian companies have also created a canopy for themselves, one under which more deserving and needy smaller businesses fail to grow for want of credit.

Bad loans at Indian banks, especially those controlled by the government, will increase further in the year to 31 March, placing additional strain on the already stressed financial system, a central bank study warned.

Gross non-performing asset (NPA) ratio of banks will rise to 12.2% by March 2019 from 11.6% at the end of the previous fiscal if economic conditions remain the same, said the Reserve Bank of India (RBI) financial stability report.

The report said weak profitability of banks is an additional concern as it prevents lenders from setting aside adequate money to cover potential losses on loans and makes them vulnerable to adverse shocks. 

In a scenario of severe stress, this ratio may rise to as high as 13.3% by March, the report said. For public sector banks, this ratio may jump to 17.3% by March.

Rising bad loans will also lead to further erosion of capital buffers. The capital adequacy ratio of banks will drop to 12.8% by March 2019 from 13.5% at the end of the previous year. A severe shock could, however, bring down the capital adequacy ratio of as many as 20 banks, mostly state-run, below 9%, the report said.

Analysing the effectiveness of prompt corrective action (PCA), the stability report said the gross NPA ratio of state-run banks under PCA will worsen to 22.3% by March, with six banks likely to experience capital shortfall under the baseline scenario.

Modi Govt has a herculean task to tackle the NPA mess on one hand, fund the credit demand, and manage the fiscal deficit without increasing market borrowing. Raising taxes would make him unpopular in the election year. With the global economy going through a slugging phase with rising trade wars between US and China, Its India which is suffering as a collateral.

If NaMo manages to pull off this banking mess and sets it in order, he would have laid the foundation for a strong economic growth in the coming decade!