Abolish CRR Issue  -  RBI DG Snubs  SBI Chief  - Need to Observe Restraint

by

Rajesh Goyal   

I was taken aback when today morning I saw a headline in Economic Times "RBI Deputy Governor K C Chakrabarty snubs SBI's Pratip K Chaudhuri on CRR comments".   Only few days back I have also given my views on SBI Chief's comments.     Although I was against the CRR abolition  as expressed by SBI Chief, yet Mr Chaudhuri being the head of the largest lender in India certainly enjoys my full respect.   Anybody who reaches this level undoubtedly  has not only a good knowledge but also number of other qualities (of course he can have some weaknesses, as we all have).    Thus, while commenting on the views of SBI Chief,  I had no intention of showing him in poor light and my views were purely based on  my own banking experience and banking knowledge.   Some readers felt that I was trying to show as if I had more knowledge than SBI Chief and I am in the habit of unnecessarily criticising.   But remember that if I criticise SBI Chief's views, I am in line with RBI's views.   Therefore, we have learn to respect the views of others too.

The above headlines in the Economic Times and details in the news item which reads "...if the SBI Chairman is not able to do business as per our regulatory environment, he has to find some other place," RBI Deputy Governor K C Chakrabarty said in a sharp reaction to Chaudhuri's recent comment that CRR  does not help anybody and it was unfairly put on banks"  left me almost speechless.  I am not sure, what will be reaction of other bankers but I feel it will leave a bad taste for long time among the top management of the banks.

SBI Chief has every right to have his views on such issues and he must express these but only at the right forums.   It was not desirable to express these views  in the press as I too felt that he is doing so to divert attention from the recent adverse publicity in the media.   His next day statement of 7 days banking also appears to be on the same lines and without sincere and serious discussions within the banking industry.  Thus, to that extent I feel SBI Chief had over stepped and selected wrong forums.     It would have been better if he had expressed  such views  (on CRR and 7 days banking) within four walls and in the meetings with RBI officials. 

I feel SBI Chief over stepped but as a head of the largest header has every right to express his views on such issues.   Others (like big shots DG RBI  and small bankers like me may not agree with him).   However, the comments by DG of RBI are too harsh and should not have been expressed at the open forum by him.   Thus, two wrongs have happened. 

Mr Chakbrabarty is known for his extreme views on number of issues and expressing the same sometimes at the public forums.   I have seen his working closely  during my service , when he had been harsh with top officials of the bank on small issues.  With his God gifted high pitch voice and deep understanding of the economic scenario and even new banking subjects like ALM, Risk Management, Derivatives , FEX etc., it was almost impossible for even the most experienced GMs / EDs to match or counter him.    Thus, it was no surprise for me to know  that he has used such harsh comments against SBI Chief.   What has shocked  me is that such comments were used in the public forum where press too was present.  However, as I was not present at the spot, it is also possible that media has unnecessarily highlighted the issue out of context.   Some reports are also indicating towards that.

Such exchange of acrimonious words in public, among the top two bankers,  does not augur well for the industry.   If RBI had felt offended by the comments of SBI Chief, he should have been called at RBI and briefed to refrain from such comments in public in future.    Mr Chakrabarty also needs to understand that now he is representing the Banking Regulator and not a bank.   Bankers still remember about his comments to the press immediately after his joining RBI, which annoyed the Governor and he was stripped off almost all his major portfolios, as Governor had felt that such unwarranted comments can send a wrong message.  At that time I dismissed this as comments by an inexperienced banker in his role as a second in command at RBI.   Remember Mr Chakrabarty was NOT snubbed in the public by our cool Governor, Mr Subbarao  but a strong message was delivered to DG to leave his past habits.   He needs to learn the art of controlling his tongue or else the whole banking industry may have to suffer.

Finally it will be RBI who will decide whether CRR should be abolished or not.  SBI Chief and others like me can only express our views on the issue.   However, I can express my views more freely than SBI Chief purely because of different situations.  I hope better senses will prevail on both sides (RBI and SBI) and this issue will not further escalate by more unwarranted comments from either side.