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Thursday, April 3, 2014

Banking license proved reforms have not be stayed at any cost.Adhaar to be scrapped as subsidy would not exist.

Banking license proved reforms have not be stayed at any cost.Adhaar to be scrapped as subsidy would not exist.

Palash Biswas

Banking license proved reforms have not be stayed at any cost.Nandan Nilekani has left for his political flight having ensured the monopolistic profit for ADHAAR to be scrapped as soon as BJP Hindutva government takes over. It does not mean that subsidies have to be sustained. Rather it means no link is needed further as subsidies have to go. The corporate server has set the second generation programme with surgical precision and banking license heralded the trend.Mind you,it is election time and a time to woo the voters who are deprived of citizen sovereignty all the way. Since corporate corruption is a major issue, licence to well known companies are delayed to avoid controversy.They will get sooner or later what they want.

Just read Economics Times which published a full page on Adhhaar to be wasted.It had nothing to do national security or internal security.It is blatant violation of Indian constitution and naked wastege of taxpayers money for the best interst of Mr Nandan Nilekani.The project has to be endorsed by the parliament while governmenyts in differenet states illegally linked Adhaar to basic services which may not be withdrawn for unconstitutional Adhaar as the Suprme Court of India has ruled.But states have intensified the Adhaar campaign violating civic and human rights and making it a case of contempt of court.

Prime Minister in waiting Narendra Modi enjoys full support of global economic order,corporate India and MNCs.He has showcased Gujarat model of development skipping aggressive Ram Mandir priority on the one hand, and on the other hand, he has assured global free market economy to open up Indian economy. Whole set up of taxation patterns and labour laws have to be changed to load taxation load against poverty line having an open agenda to finish agrarian India with its working classes and producer communities. Indo US nuclear treaty has to be made a reality and retail FDI should not  be waited at all. It is rather eye washing that  Bharatiya Janata Party is likely to express its opposition to genetically modified (GM) crops in its party manifesto and suggest that an integrated commission be formed to look into all aspects of farming including minimum support price for grains, crop insurance, adequate and timely compensation to affected farmers and irrigation.

India's Hindu nationalist Bharatiya Janata Party said Monday that if it wins national elections set to begin next week, its first priority would be to revive investment in the country's slowing economy.

"We'll have to reestablish confidence of both Indian and international investors in the Indian economy," said Arun Jaitley, a senior BJP leader. But, he added, "our policy will also have a social conscience," a signal that welfare programs for the country's poor would also be a priority.

The BJP hasn't offered details of its economic plans, even though the start of balloting is just days away. Opinion polls indicate that the party is more popular than its main rival, Congress, which has been in power for the past decade and is facing a wave of anti-incumbent sentiment.

The BJP's prime ministerial candidate, Narendra Modi, has campaigned on pledges to spur development, create jobs and boost manufacturing.

His tone has been starkly different from the left-leaning Congress, which promised to expand health care, housing and other benefits for the poor in its election manifesto last week, while also pledging to revive growth and invest more in infrastructure.

The Reserve Bank of India (RBI) on Wednesday granted two preliminary licenses to set up new banks in a country where only one household in two has access to formal banking services.

The approval of licences for IDFC Ltd (IDFC.NS) and Bandhan Financial Services marks the start of a cautious experiment for a sector dominated by lethargic state lenders, many of which are reluctant to expand into rural areas or towns where banking penetration is low. No new Indian bank has been formed since Yes Bank (YESB.NS) in 2004.

Proponents of more licences hope deep-pocketed corporate-backed banks will do more to serve these markets, but critics worry about whether companies can strictly separate their retail banking operations from their main businesses.

Despite these concerns, and the uncertainties raised by general elections due to conclude by May, the RBI has said it plans to issue more licences.

RBI Governor Raghuram Rajan said in a television interview earlier on Wednesday that banking licences will be an on-tap facility, meaning the central bank will keep issuing new licences to applicants it deems fit as and when required.

The Bharatiya Janata Party, which is overwhelmingly leading in polls, has not clarified its stance on the expansion of the banking sector.

"RBI's approach in this round of bank licences could well be categorised as conservative," the central bank said in a statement.

"At a time when there is public concern about governance, and when it comes to licences for entities that are intimately trusted by the Indian public, this may well be the most appropriate stance."

The RBI said the approval would be valid for 18 months during which IDFC and Bandhan Financial will have to comply with requirements laid down by the central bank.

IDFC, a Mumbai-based non-bank financial company, specialises in infrastructure lending, while Bandhan Financial is a microfinance organisation based in Kolkata.

The central bank said it will also consider an application from India Post, but under a separate process to be carried out in consultation with the government.

The central bank said 25 applicants had been considered and judged under criteria including analysis of their financial statements, their track record over the past 10 years and their potential to run a bank.

However, big companies that applied did not receive a license in this stage.

Applicants had included billionaire Anil Ambani's Reliance Capital (RLCP.NS); the financial arm of Larsen & Toubro (LART.NS), India's biggest engineering group; and Shriram Capital, the holding company for Shriram Transport Finance Company (SRTR.NS).

Opinion polls suggest Mr. Modi's message has resonated with Indians frustrated with sluggish economic growth, alleged corruption and a government widely viewed as inefficient.

In a televised interview Monday, Mr. Modi spoke about removing bureaucratic hurdles, bringing predictability to tax policies and creating jobs by encouraging new industries like agro-based ventures, ship building and defense manufacturing.

"Today, vote-bank-oriented programs that are bankrupting our treasury are being called economic reforms," Mr. Modi said. "Economic reforms are those that breathe new life into a system and create opportunities for people."

As chief minister of the western state of Gujarat, Mr. Modi built a reputation as a strong leader who helped businesses by building infrastructure and reducing red tape—and India's stock market and the rupee have been rallying on the belief that a BJP government would turn the economy around.

Mr. Jaitley said Monday that in the last decade, Congress had halted the liberal approach it had adopted in 1991, and he said his party would work to make sure "India once again is a great place for doing business."

At the same time, Mr. Jaitley said, his party wouldn't rely on the benefits of growth to trickle down to the poor. "India will always need, at least for the foreseeable future, a state intervention for poverty alleviation," he said, a message aimed at India's millions of poor.

A new survey by the Pew Research Center shows there is overwhelming support for rural-jobs and subsidized-food programs that were centerpieces of Congress's policy agenda.

Congress has criticized Mr. Modi for being too close to big business. "His brand of liberalism is crony capitalism," India's finance minister P. Chidambaram said Monday

BJP Manifesto Committee Chief Murli Manohar Joshi met around 55 people, including farmers, scientists and NGOs representatives  to discuss various issues related to farmers.

The representatives also emphasised that the BJP-led National Democratic Alliance should set up an integrated commission if it comes to power to deal with all issues related to farmers. "The commission would ensure that farmers are given the right MSP (minimum support price) for their crops, decide the bonus, ensure that proper and timely compensation is given for damaged crops, and crop insurance," Joshi said.

The AIADMK Government would never allow genetically modified seeds to be tested in Tamil Nadu as the field trials would affect the people and the agricultural fields, the Chief Minister J. Jayalalithaa has said.

She also accused the Central Government headed by the Congress of piling misery upon misery on the people with its wrong economic policies.

She said the Environment Ministry at the Centre had approved field trials of genetically modified crops of more than 200 varieties including rice, wheat, maize and cotton, among others, by private companies. This would affect human beings and farm lands. It would only benefit MNC seed companies, and bring misery to the farming community.

She said farmers could not get seeds from genetically modified crops and they would have to approach the private companies for seeds for replanting, making food grain production the preserve of a handful of private companies. She assured the gathering that her Government would never allow testing of genetically modified seeds in the State. She went on to say that when the new Central Government, of which AIADMK would be a part, takes office, permission granted at the national level for testing of genetically modified crops would be scrapped.


India has 27 state-run banks and 22 private sector banks, according to RBI data, but its ratio of branches to adults is only about one-fourth of Brazil's, leaving about half of households in India - a country of 1.2 billion people - outside the banking system.

Over the last few years, RBI has been pushing banks to make more genuine efforts to penetrate into India's hinterland and increase lending to farmers, small traders and businesses.

But banks, struggling under huge piles of non-performing assets that are eroding their capital, have been reluctant.

The RBI formed a four-member external panel to start evaluating the applications for new bank licenses from November but has made clear that it will go slow.

It said on Wednesday it will consider giving out partial licenses that would allow companies to provide only few banking services, and consider bank applications on more regular basis as it learns lessons from the initial licenses.

"One can't expect these two licences to be a game changer. Scaling up, reaching out has its own cost," said Robin Roy, associate director of financial services at PriceWaterhouseCoopers India. "It won't be a cake walk to convert (that) into a banking model."

IDFC Chairman Rajiv Lall welcomed the grant of a license but anticipated an arduous process. "We will start working on this tomorrow. The whole structure has to be compliant in 18 months, so that has a number of legal steps," he told CNBC-TV 18 in an interview.

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