Articles by D N Ghosh

It is unrealistic to think that the public sector banks can revitalise agricultural credit delivery without a completely revamped extension services system. It is also time to consider supporting microfinance organisations to take on a larger responsibility in livelihood development. The banks cannot, on their own, carry out the full range of rural credit lending services.

In the current supervisory regime of banking regulation, governance concerns take a lower priority than asset-liability and capital-adequacy issues. The RBI's proposed stipulations on ownership regulation will have credibility only if the central bank adds another dimension to its supervisory range. It must accept that keeping a watch over the practices and processes of commercial banks is as much a critical component of its supervisory responsibility, as scrutinising the commercial bank's handling of its asset and liability portfolio. The RBI should consider having a separate instrument, a kind of management audit and inspection, as an essential component of its overall inspection. This will add teeth to its surveillance responsibility and keep the RBI abreast of what is happening on the governance front in every commercial bank.

With the laudable objective of disciplining market participants, the Securities and Exchange Board of India (SEBI) has embarked on a massive operation of building up a comprehensive unique identification scheme. But how will biometric information, to be collected on such a massive scale, add teeth to SEBI's surveillance exercise? And how well is it equipped to isolate those that pose a threat to the integrity of market process? Regulators have to be certainly effective, but they have to be understanding and imaginative as well.

For years political parties have failed to take note of the growing intensity of feeling against disruption of civic life. Often the disruptions are massive and the agencies of governance choose to look the other way. The circumstances in which a judge of the Calcutta High Court recently felt compelled to attempt to regulate disruptive public protests in the interest of citizens' right to go about their lives are by now well known. If political parties had been behaving responsibly the confrontational ambience would never have arisen. It is the behaviour of political parties and the failure of deliberative politics that have opened the floodgates of judicial intervention.

What has happened in Wall Street over the past 18 months raises several issues of regulatory governance which are immensely relevant for countries such as India that have embarked on reform of their financial and capital markets. There is deep concern that the regulating agencies are not adequately equipped and capable of discharging their primary responsibility of preserving the integrity of the market processes.