Banking News Dated 26 September 2017

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Banking News: September 26, 2017

Wishing you all
a very happy Durgapuja

Next edition of ‘Banking-News’
will be on October 3, 2017

SBI reduces minimum balance limit to
Rs 3,000; revises down maintenance charges

Beena Parmar
The Moneycontrol News
Published on September 26, 2017

Mumbai, September 25:  State Bank of India (SBI), country’s largest bank, has reduced minimum monthly average balance (MAB) on savings accounts for metros from Rs 5,000 to Rs 3,000 and charges for non-maintenance were reduced by 20-50 percent across categories.

Effective from October 1, the bank said it has decided to treat the metro and urban centres in the same category and the requirement of MAB in metro centres stands reduced to Rs 3000.

Minimum balance for urban, semi-urban and rural centres continues to be at Rs 3,000, Rs 2,000 and Rs 1,000, respectively, as per the bank’s website.


For non-maintenance of MAB, the charges have also been revised downward ranging from 20 percent to 50 percent across all population groups and categories, the bank said in a statement.

“The charges at semi-urban and rural centres range from Rs 20 to 40 (from Rs 25-75 currently) and at urban and metro centres from Rs 30 to 50 (from Rs 50-100 currently).

The  bank has also removed charges for non-maintenance of Monthly Average Balance (MAB) for pensioners, beneficiaries of social benefits from the government and accounts of minors.

“This is in addition to the already exempted categories under PMJDY (Prime Minister’s Jan Dhan Yojna) accounts and Basic Savings Bank Deposits Accounts (BSBD),” the statement added.

The bank has a strong deposit franchise having 42 crore savings bank accounts out of which 13 crore accounts under PMJDY / BSBD were already exempted. The above revision is likely to benefit another 5 crore account holders.

Following categories of savings bank accounts are excluded from MAB requirement:

v         Small Accounts
v         Basic Savings Bank Deposit Accounts
v         Financial Inclusion Accounts
v         Phela Kadam and Pheli Udaan accounts.
v         Minors up to the age group of 18 (Primary Account Holder)
v         Pensioners, all categories, including recipients
of social welfare benefits.

The bank also clarified that customers always have the option of converting the regular savings bank account to BSBD account, free of charge, in case he desires to avail basic savings bank facilities without being subject to maintain MAB.

SBI deploys AI-based financial solution SIA

Mayur Shetty
The Times of India
Published on September 26, 2017

Mumbai, September 25:  State Bank of India has deployed SIA, an artificial intelligence-powered software that has the capability to respond to 850 million queries a day, making it the largest-financial sector AI solution in the world.

The AI banking platform has been provided by Payjo - a company based out of Silicon Valley in US and Bengaluru. SIA or SBI Intelligent Assistant is a multilingual chatbot which can respond in 14 languages in speech or text.

In the initial three months, it will provide responses to standard queries like information on products and services and responding to frequently asked questions like ATM locations and IFSC codes.

Speaking to TOI, Srinivas Njay, Payjo founder and CEO, said that in two to three months it will evolve to answering transactional statements like ‘What is my balance?’, ‘Pay my telephone bill’ or ‘Send money to mom’.

“In the third phase it will be proactive in telling you that you are leaving money idle and will remind you of bills that are coming up for payments," said Njay.”

“India leapfrogged into the mobile revolution with many people adopting internet for the first time through mobile. The idea is, can we give all these people a simpler new way of interacting with the bank?" said Njay.

According to Njay, Payjo won the bid for SBI over other giants in the reckoning - IBM and other AI providers such as Nuance and [24]7. He added that this is the largest deployment of the AI platform after Google and Amazon.

According to SBI chief technology officer Shiv Kumar Bhasin, SIA is the first-of-its-kind banking application in AI and conversational banking.

"It will enhance customer service several notches above. Payjo's expertise in the conversational banking domain helped us build SIA as a superior chatbot in the global banking space," said Bhasin.

According to Njay, India's banking infrastructure is ahead of the IT systems in the western world. "SBI has built an application programming interface (API) layer over its banking solution. We use the same layer to gather data," he added.

SBI opens new branch in Singapore

The Business Line
Published on September 26, 2017

Singapore, September 25 (PTI):  State Bank of India (SBI) today opened its sixth branch in Singapore, extending its services in the country’s heartland.

The new branch has come up in Ang Mo Kio area, which is popular for its housing estates.

SBI already operates branches in housing estates Marine Parade and the industrial estate of Jurong.

It has two branches in Little India precinct as well as one in the central business district.

“About 80 per cent of our customers are Chinese and the rest are high networth Indians,” said SBI country-head Soma Sankara Prasad after opening the Ang Mo Kio branch to a roaring lion dance, a Chinese tradition.

SBI offers the highest interest rates on deposits among other banks here, handles wealth management, insurance and rupee remittances among a wide range of services, he said.

The new branch underlines SBI’s growing banking business in Singapore, he said.

Banks Board Bureau asks PSBs to identify senior
bank officers who can be groomed for top post

Dheeraj Tiwari
The Economic Times
Published on September 26, 2017

Mumbai, September 25: The Banks Board Bureau (BBB), headed by former Comptroller & Auditor General Vinod Rai, has asked all state-run banks to identify senior-level bank executives, who can be groomed across functions to prepare a pipeline of leaders to take over as managing directors and chief executives in future.

The move is a part of the government's efforts to overhaul human resource practices in public sector banks.

"We have been asked to identify officers at deputy general manager level, who will be mentored by the BBB. Such identified officers will move across all verticals such as IT, HR and operations within the bank for a period of one year," said a government official aware of the developments.

A senior bank executive, who is privy to this information, said the BBB was not satisfied with the current level of expertise among the top executives in PSBs.

"The shortlisted candidates for the top post or at executive director level did not have enough experience across all verticals. It was felt that banks themselves should identify performing candidates and accordingly they will be mentored by the BBB," this official added.

The government set up the BBB in February 2016 with a mandate to recommend candidates for the top posts at state-run banks and financial institutions. Last year, the government expanded its role to also help banks in their capital-raising plans and develop business strategies.

In April, the BBB had said that it would advise the government on evolving training and development programmes for management personnel in PSBs and help banks develop a robust leadership succession plan for critical positions.

The government also reviews the performance of top executives in PSBs and those who don't score too well in the evaluation will be asked to improve or quit, a finance ministry official said.

Earlier this year, the government shifted Usha Ananthasubramanian, then the MD of Punjab National Bank, to the smaller Kolkata-based Allahabad Bank. Similarly, Melwyn Rego, then the MD of Bank of India, was transferred to Syndicate Bank. A halt on the selection of chiefs for state-run banks is also likely.

ET View: Reward Seniors: Senior functionaries must be identified based on the hard work and rewarded. The only way to retain talent is to pay them as well as what an alternative job would. Pay of senior functionaries who expose banks to risk and also offer opportunities to make profits must be linked to how well their decisions evolve over time.

RBI caps bank investments
in private equity funds at 10%

Sangita Mehta & Gayatri Nayak
The Economic Times
Published on September 26, 2017

Mumbai, September 25: The Reserve Bank of India (RBI) has capped bank investments in private equity funds at 10% while completely prohibiting investments into hedge funds. RBI also permitted banks’ subsidiaries to provide commodity broking services and be a professional clearing member which are subject to risk control measures and prudential norms.

In a notification issued late on Monday evening, the RBI has said that subsidiaries of banks will “not investment of more than 10% of the paid up capital in a category I and category II of Alternative Investment Fund (AIF).” This essentially means that banking subsidiaries making investments in private equity above 10% of the capital will need to seek approval from the banking regulator.

There are 3 categories of AIFs where in Category I includes social venture funds, infrastructure funds, venture capital funds and SME funds, category II includes private equity funds and debt funds and category III are funds that make short-term investments such as hedge funds.

In a parallel development, that could potentially boost corporate participation on the commodity derivatives segment (CDS), RBI has said that banks can offer broking services to clients on Sebi registered commodity exchanges like MCX and NCDEX.

This can be done through a subsidiary set up for the express purpose, or by an existing subsidiary of the bank. For instance, HDFC Securities, a subsidiary of HDFC Bank, which so far offered trading in shares and fixed income could now offer trading in CDS, if it’s parent so decides. This will be subject to risk, net-worth and other parameters laid down by Sebi.

“This is an extension to a prior RBI circular nudging banks to advise their clients to hedge their commodity price risk on Sebi recognised commodity exchanges,” said Samir Shah, MD & CEO, NCDEX. “In that sense, our attempts have fructified and this is a move that could dramatically raise hedger participation on the bourses.” However, banks cannot run proprietary trades, or trade on commodity derivatives segment, RBI has stated.

While allowing banks to be professional member in clearing of commodity derivative trades, RBI has barred banks from undertaking proprietary trading on its own account. Banks can, however, offer clearing and settlement services to members and clients of the exchange as per the board approved policy.

RBI has directed banks to put in place risk control measures and prudential norms on risk exposure in respect of each of its trading members, taking into account their net worth and business turnover. The bank shall ensure strict compliance with various margin requirements as approved by their board or the commodity exchanges.

Crisis at PSU banks:
Why Centre must recapitalise banks
ASAP; here is the best way forward

The Financial Express
Published on September 25, 2017

Mumbai, September 25: The government, it would appear, has finally come around to the view that PSU banks need a more aggressive recapitalisation plan than the Rs 70,000 crore it had initially envisaged under its Indradhanush scheme— according to Credit Suisse, PSU banks require around Rs 3 lakh crore of additional capital by FY19 to meet RBI norms on capital adequacy. While the government is believed to be planning to hike this fiscal’s infusion from the planned Rs 10,000 crore to Rs 25,000 crore, this is hardly likely to be enough. With this kind of infusion, PSU banks will have no option but to curtail their lending dramatically— while stealth privatisation may indeed be the government’s plan, it doesn’t help.

For one, with consumers continuing to trust PSU banks to hold their deposits, the mismatch between rising deposits and contracting/ stagnant lending will make the banks weaker. Two, while the government is in favour of banks merging, this does not lower their capital needs. Indeed, since there is no plan to allow massive retrenchment of labour and closing of branches, the merged entity is likely to be weaker than the independent ones. Also, with more loans before the NCLT for insolvency resolution, banks will also need to set aside much larger provisions than in the past.

In such a situation, a better bet will be to issue recapitalisation bonds for the full Rs 3 lakh crore and give the banks the required levels of capital— interest costs on these bonds will form part of the fiscal deficit. As and when banks are able to sell off non-core assets, the recapitalisation bonds can be retired. While certain banks have to be put up for privatisation, mergers must be considered only after there is a firm agreement on shedding workers and closing unviable bank branches. Weaker banks have to remain under RBI- style restrictions on expanding their balance sheets which include taking fresh deposits— in any case, the Rs. 3 lakh crore will mainly ensure they have the requisite level of capital adequacy and fund the expected losses over the next few years; the money is not going to be enough for these banks to start lending in any big way. The better banks will also find it easier to raise funds, and at better valuations, once they are adequately capitalised.

All you wanted to know about….
Price Deficiency Payment

Rajalakshmi Nirmal
The Business Line
Published on September 26, 2017

September 25, 2017:  The Niti Aayog has released a three-year agenda for the Centre. Of the several things it has touched upon, one is agriculture, with a focus on doubling farmers’ income. The think-tank has recommended reforms in the APMC Act and tenancy laws and tweaks to the eNAM (electronic National Agriculture Market). It has also suggested ‘Price Deficiency Payment’ system to address the gaps in Minimum Support Price (MSP) based procurement of crops.

What is it?

Under Price Deficiency Payment, farmers are proposed to be compensated for the difference between the government-announced MSPs for select crops and their actual market prices. For crops such as rice and wheat where it is effective now, MSP announcements will continue. For other targeted crops, price deficiency payments will be made. However, it has to be noted that there may be a cap on the extent to which the Centre will bridge the gap between MSP and market price.

Niti Aayog has said that the farmer may be entitled to the difference up to say, 10 per cent. To avail this benefit, each farmer would have to register with the nearest APMC mandi and report the total area sown. The subsidy may be paid via Direct Benefit Transfer (DBT) into the farmer’s Aadhaar-linked bank account.

Why is it important?

The key benefit from the price deficiency payment is that it will reduce the need for the government to actually procure food crops, transport and store them and then dispose of them under PDS. The difference between the support and market prices can instead simply be paid in cash to the farmer. Price deficiency payment can also keep India’s bill on food subsidies under check, believes Niti Aayog. India’s food subsidy schemes have frequently come under the WTO scanner. Even in the meeting held in March this year, there were questions raised on the minimum support price programmes for wheat, sugarcane and pulses, by the US, EU and Australia.

These countries see India’s procurement subsidies as trade-distorting. In recent years, the government has been seeing the accumulation of large food grain stocks in its godowns over and above the buffer requirement. This entails storage and wastage costs that add on to the subsidy bill.

Why should I care?

The PDP system may be more effective than MSPs at ensuring that cropping patterns in India respond to consumer needs. It may also ensure that more farmers actually benefit from price support. The current MSP system has many flaws. First, its reach is limited, in terms of both the crops and the geographical area it covers. Though every year MSPs are announced for 20-plus crops before the sowing season begins, actual procurement at MSP is restricted to a few crops such as paddy and wheat. This has led farmers to excessively focus on the crops with assured procurement. The country’s cropping pattern has been skewed in favour of rice and wheat in the last three decades, leading to reduced sowing of coarse cereals.

Monoculture also results in soil degradation and makes crops susceptible to pest and weed, leading to higher usage of chemical fertilisers and pesticides. The price deficiency system may incentivise farmers to diversify beyond the conventional cereals. The crops with effective MSPs such as rice, wheat and sugarcane, where support prices are effective now, are also water-intensive.

The bottomline

MSPs haven’t been a great support to either farmers or consumers. If the new system of price deficiency payment can be more effective, why not give it a shot?

Diagnosis and Treatment of Economy
Suggested By three Top Economists

Tushar Dhara
The News18 Online
Published on September 25, 2017

The Narendra Modi-led NDA government could either go for a fiscal stimulus (increase government expenditure more than budgeted or cut taxes to stimulate demand) or a monetary stimulus (cut benchmark interest rates). However, the latter doesn't seem very likely since the RBI has its own concerns around inflation.

New Delhi, September 25:  Prime Minister Narendra Modi is expected to announce an economic package soon to revitalise a moribund economy. The government could either go for a fiscal stimulus (increase government expenditure more than budgeted or cut taxes to stimulate demand) or a monetary stimulus (cut benchmark interest rates). However, the latter doesn't seem very likely since the Reserve Bank of India has its own concerns around inflation. Other reports indicate that the government could ask departments to expedite their already budgeted expenditures rather than committing fresh funds. News18 spoke to three economists about their diagnosis of the Indian economy and what steps should be taken. Here is what they have to say:

Upasna Bhardwaj, senior economist, Kotak Mahindra Bank

Although demonetisation and GST caused disruption across various sectors, especially in manufacturing and real estate, there had already been an economic slowdown for at least two quarters preceding these two events. GST implementation has largely affected the semi-organised sectors given the heavy procedural and compliance issues.

By April 2016 there already were signs of a slowdown. Private investment has been missing completely for the last 2-3 years. In such a scenario, private consumption and government capital expenditure has been keeping the economy afloat.

Going ahead, given that we are not expecting private investment to pick up, the onus lies on the government, especially when there is limited room for interest rate cuts by the RBI amid the uptrend in inflation and an adverse global scenario. The nature of fiscal stimulus by the government should be productive in nature, otherwise we will simply be boosting consumption in the short term which in turn will be inflationary in nature.

Recommendation: The government should spend on productive infrastructure like roads, railways, bank recapitalisation, affordable housing etc. Pick up in construction activity could trigger a virtuous cycle of better jobs and income.

Inflation prediction: 4.7% by end march 2018

Growth forecast: 6.8% with a downward bias

N R Bhanumurthy, National Institute of Public Finance and Policy

The biggest problem right now is on the demand side. Private demand, investments and exports are moribund and only government expenditure is holding up the economy. The shocks experienced over the past 10 months — GST and demonetisation — have taken a toll. Even rural demand is down, because the demand for tractors, seeds etc should have peaked by now, but it is muted.

The economy is in a downturn and it is important for the government to step in with a fiscal stimulus. There is no need to stick to the targets set out in the Fiscal Responsibility and Budget Management Act or relaxing the fiscal deficit targets for the next year. However, the quality of the stimulus is more important than quantum.

Recommendation: The government needs to expand capital expenditure on infrastructure, power, ports, railways, roads and housing.

Inflation prediction: 4%-5% by end March 2018

Growth forecast: 6.8% for this year

D K Agarwal, Chairman and MD, SMC Investments

After demonetisation and GST, things have not gone the way they should have. The small and medium manufacturing units were affected and demand in the economy was compressed. The basic problem now is how to create demand in the economy. The government will have to increase its spending in order to put money in the hands of people so that they can start spending and create demand.

Recommendations: Affordable housing should be taken up on an urgent priority. They should also give some benefits to the real estate sector because Real Estate (Regulation and Development) Act has affected activity there and construction has cooled to some extent. RERA is beneficial to large developers, but the small and unorganised developers are finding it difficult to comply with the provisions.

Inflation prediction: Don't see it going up from current levels

Growth forecast: 6.5% to 7%

How financial services incumbents can keep up

Aditya Sharma, Renny Thomas,
Shwaitang Singh & Vinayak H V
The Mint
Published on September 26, 2017

They should assess how they can find the right ecosystems in order to acquire customers and deliver relevant and convenient financial solutions seamlessly

Ernest Hemingway’s The Sun Also Rises has one character asking another how he went bankrupt. “Two ways,’’ is the response. “Gradually, then suddenly.” Years later, disruption in India’s financial services business could well follow a similar trajectory. Just as Uber and Airbnb have disrupted the transportation and hotel industry, a confluence of factors is creating the opportunity to disrupt India’s financial services. Incumbents who ignore these forces or are slow to react place themselves at significant risk.

Among the many reasons, foremost is rising customer expectations. Consumers are getting used to product and service standards provided by modern internet companies in every aspect of daily life, from buying groceries to booking movie tickets online, and expect these experiences to extend to other business transactions. Furthermore, falling costs of wireless data access and smartphones are unlocking access for millions of consumers every month. With over 200 million mobile data-subscribers in India, the smartphone is turning into a focal point for delivering a range of experiences while collecting granular information on user behaviour.

India’s new large-scale public digital infrastructure is yet another catalyst. Platforms like Aadhaar, DigiLocker, the Unified Payment Interface (UPI) and Bharat Interface for Money (BHIM) have allowed earlier paper-based cumbersome processes like account opening to become digital and remotely executable. Usage of this digital infrastructure is growing fast. Over 10 million Aadhaar identifications and four million eKYC verifications are being carried out daily. This sets the stage for the digital roll-out of more complex banking services like lending and wealth management.

Moreover, new Reserve Bank of India regulations have changed the definition of bank outlets to broadly include all types of branches and bank correspondent (BC) outlets, which can now open full-time or part-time. This can have wide-ranging implications; it is now possible for incumbents to deliver financial services by sharing the physical distribution networks of non-banking partners—helping spare full-scale investments in distribution infrastructure.

Perhaps the most subtle but potentially game-changing disruption we are seeing is the blurring of boundaries between customer-facing businesses and network-driven ecosystems. Historically, consumers have been served by dozens of parallel value chains, with different accounts and using different platforms. These were disconnected services with limited synergies. But in today’s networked era, customers can have a plethora of distinct services on a single platform, as part of a larger ecosystem. We have identified 12 retail and institutional ecosystems emerging in India, which are likely to address revenue pools of over Rs1-2 trillion by 2022. This is far higher than traditional (standalone) banking revenue pools.

An example of this phenomenon globally is the Chinese company Tencent, whose messaging platform WeChat, allows customers to communicate, book cabs, buy gifts, send money, book services and use basic banking services, all on a single service platform. Using this ecosystem approach, Tencent has created a cashless economy and a mine of user data. Such ecosystems are also emerging in India, for example, messaging providers introducing peer-to-peer payment options, and e-commerce platforms offering credit to retail customers and businesses. Incumbent financial services players have the opportunity to integrate with these networks to cross-sell services to an engaged customer base, and use the data generated to improve delivery of solutions.

Challenges for India’s banking sector incumbents are further exacerbated by their high-cost structures. Fixed costs are built into sales and distribution networks and legacy technology stacks and these make it difficult to introduce new products and features rapidly. The Fintech ecosystem, on the other hand, is evolving rapidly with over 400 start-ups in business. Some of these are attacking banking revenue streams in payments and unsecured lending.

All is not gloom and doom for incumbents. Trust and long-standing relationships have always been important pillars of the banking business. These relationships and the data troves with banks are a significant advantage. Ramping up efforts on three fronts could help them build on these strengths.

A change in strategic posture and business models to account for the impact of the new ecosystems and platforms could be a good starting point. Incumbents should assess how they can find the right ecosystems to tap into and embed their banking services, in order to acquire customers, and deliver relevant and convenient financial solutions seamlessly. Once established, ecosystems can serve as entry barriers for competition, and promote good financial behaviour among customers as defaulters risk being excluded from the ecosystem. Creating such ecosystems would require incumbents to stitch together partnerships with different players with complementary capabilities, customers or distribution networks.

Digitizing the “core” and adopting new digital operating models comes next. Digitization of banking journeys is acknowledged as a lever to enhance customer satisfaction, generate back-office efficiencies and enhance reach and scale, especially in remote areas.

India’s biggest banks currently spend over Rs5,000 crore on distribution-related costs. With new regulations allowing incumbents to leverage their non-banking partners’ distribution footprint, millions of retailers and shopkeepers across the country could potentially act as BC agents, allowing sharing of distribution costs and improving utilization of fixed assets.

Building capabilities on analytics, technology and delivery is another key dimension for incumbents. Taking on nimble attackers requires systems and processes that allow rapid experimentation and faster time-to-market for customer-facing services. This would need adoption of modern technology stacks and development practices. In addition, incumbents will also need to compete with consumer internet companies to hire the best talent.

The Indian banking sector is at crossroads. Traditional players are facing a huge disruption, while digital growth is driving change. The period of disruption presents tremendous growth opportunities. Incumbents will need to make bold moves and initiate major transformations to leverage these opportunities.

Aditya Sharma, Renny Thomas, Shwaitang Singh and Vinayak H.V. are, respectively, associate partner, senior partner, engagement manager and partner at McKinsey & Co.

Home truths from an unexpected quarter

Rasheeda Bhagat
The Business Line
Published on September 26, 2017

Surely, the Government must pay heed when Swamy and Gurumurthy question the direction the economy’s taking

After innumerable voices of pain emerged from the streets of India on account of there being no signs of achhe din , last week two experts from the Sangh Parivar surprised the nation by giving negative points to the economy.

First, the maverick BJP MP Subramaniam Swamy lashed out in an interview to a television channel that the Indian economy had gone into a “tail spin” and went as far as to predict, not a recession, he clarified, but a depression. But Swamy’s penchant for all kinds of fantastic claims is well known, and has to be taken with a pinch of salt, even though the occasional googly he drops does hit home.

Within a couple of days of this interview, when RSS ideologue and brilliant chartered accountant S Gurumuthy said in Chennai that the Indian economy was “hitting the bottom now, and there is no way this situation can continue”, alarm bells must ring. Speaking at a meeting organised by the Chennai International Centre on ‘Demonetisation — Its Role, Impact and Follow-up’, he blamed “too many disruptions” such as demonetisation, NPA regulations, GST and bankruptcy rules for this state of affairs.

His tone was measured, he was not critical of the top political leadership — in fact, he praised demonetisation as a “corrective step and an investment” that had resulted in 30 crore bank accounts being opened — but he did not mince words when he said that while demonetisation was a badly needed measure, its implementation was bad enough to make it a “gas chamber”.

Razor sharp analysis

You may disagree with Gurumurthy’s political ideology, but you can’t quarrel with his razor sharp analytical skills, especially when it comes to matters of finance and economy.

At the Chennai meeting, while maintaining that he was not there to “defend the Government”, he refrained from projecting a doomsday scenario and expressed optimism that economic revival could happen immediately if the Government took the required measures.

Former RBI governor Raghuram Rajan, who became the first to be denied a second term in many years, didn’t mince words either when he finally broke his silence recently on demonetisation. He revealed that as governor, his views on demonetisation had been sought, and were orally given.

He had opposed it for the simple reason that he felt its short-term economic cost would outweigh any long-term benefits. Rajan made this disclosure in his latest book, I Do What I Do , which is a compilation of his speeches on various issues as RBI governor.

GDP, informal sector hit

Economic growth has indeed decelerated with GDP growth slowing down from 7 per cent in the October-December quarter, to 6.1 and 5.7 per cent in the following two quarters. The withdrawal of 86 per cent of currency brought shock and awe, and the cash squeeze has badly hurt both consumer spending and investment decisions by businesses. The wane in confidence at all levels is palpable, irrespective of the bursts of upward spikes on Dalal Street that have sent the Sensex roaring to new highs.

It is now common knowledge that the lethal blow that demonetisation — particularly its implementation and the snail’s pace at which the new currency was made available in the market, necessitating initial restrictions on cash withdrawal — dealt on the informal sector isn’t going to heal soon. As the cash crunch forced tens of thousands of small manufacturing outlets across India to shut down, lakhs of people lost their jobs; the generation of new jobs is just not happening.

Fruit and vegetable vendors, or the guy selling fish, who still deliver at the doorsteps, continue to borrow money for their daily grind at atrociously high interest rates, going up to a crazy 500 per cent or more. Digital India remains a dream for them, as the moneylenders’ noose tightens around their necks.

Add to this the confusion that prevails on GST, coupled with the mindset of a section of our business community — which in the first place is largely responsible for the generation of black money — that continues to think of devious ways to escape the tax net. You have a lot of anger among honest taxpayers, largely the salaried classes, that they have ended up paying much higher prices through GST for goods and services that are an essential part of their day-to-day living.

So the mood among ordinary people, who lustily cheered the prospect of hoarders of black money getting bashed, but only ended up finding bundles of new notes being delivered by some corrupt bankers to homes/offices, and the RBI confirming that most of the banned old notes got back to the vaults, is turning dark and angry. Any ruling dispensation that doesn’t walk the talk is treading on thin ice.

Source: Internet News papers and Anupsen articles


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