Monday, November 11, 2013

Can Raghuram Rajan make history?

Can Raghuram Rajan make history?

This is the question on everyone's mind now. The basic economics is playing out and that is showing in the banks balance sheets now. Banks like United Bank of India and Central Bank of India have shown huge loss in their profit and loss account. Many other banks shown a good decline in their net profit. Few other banks managed to show higher profits only due to the restructuring of their prime borrowers. So the ugly window dressing which was happening in the Indian Banking Industry is coming down and the coming quarters will show more losses.

Now since RBI is indifferent to the bankers cry for cheap liquidity, some banks have raised the deposit interest rates. Still this trend is not reflected in the advances interest rates. I guess it is only matter of time as the Indian Benchmark 10 year bond yield crossed 9% today.

Now what we request and beg Dr.Raghuram Rajan is sit tight and not to give long rope to this lazy bankers of India. Let the bank which has good risk control mechanism come out of the slump faster. In the process the economy will be corrected automatically. The early signs of  real estate bubble is showing. Again RBI has to keep quiet and sit tight and allow the bubble to burst. If RBI again supports broker/corporate mafia then the much expected economic recovery will never come.

Now RGR can make history just by sitting tight? will he?

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