ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles by M K DatarSubscribe to M K Datar

The Judiciary and the Stressed Assets Resolution

When defaulting borrowers are unable to pay their overdue amounts, the matter invariably lands up with the courts for settlement through a court-regulated process of lenders taking possession of assets and their sale. However, recently some borrowers have challenged the resolution scheme designed by the Reserve Bank of India. The outcome of the judiciary-led resolution processes in the past and the recent judicial intervention are examined.

The Financial Sector in Budget 2013

A discussion of the announcements pertaining to the financial sector in Budget 2013.

Impact of Deregulated Savings Bank Interest Rates

The savings bank account holders are less sensitive to interest rate variations. They are likely to be influenced more by non-price factors such as service quality and easy accessibility. Interest rate deregulation may not therefore see a major shift in accounts.

Regulation of Credit Rating Agencies: New Business Models or Stringent Regulatory Use?

The role of credit rating agencies in the US credit crisis by transferring risks through new structured products has attracted much attention, especially since rating downgrades of these products were much faster than the other products. Improved disclosures in rating methodologies and the performance of rating models, avoiding conflict of interest situations, relevance of issuer to pay models and dealing with the oligopolistic nature of the industry are some of the lines along which new regulatory efforts could be organised. A clear articulation of the conditions for the use of ratings of "new" products by different investor classes may improve regulatory efficiency.

Whither Bank Holding Companies?

The Reserve Bank of India recently released a discussion paper on the potential implications of alternative structures for bank/financial holding companies. A description of the alternatives and a discussion of the regulatory issues.

Maharashtra's Finances

The sheer pace of the fiscal correction envisaged in the Maharashtra budget of 2005-06 is unbelievable, to say the least, and raises doubts about its sustainability over a longer period. The first doubt is inevitably the question of the consistency of the estimated levels of revenue and expenditure. Second, going beyond the numbers, are the larger policy issues underlying budget magnitudes. If there were reasons to believe that the policies culminating in the fiscal crisis would be corrected, it would be reasonable to expect some improvement in the deficit numbers.

Taxing Capital Gains or Transactions

While the finance minister is motivated primarily by revenue considerations in his approach to transaction tax by providing exemption on long-term capital gains and slashing the rate on short-term capital gains, he may have unintentionally provided additional loopholes for tax avoidance. For revenue maximisation and the efficacy of the tax system, there is a case for a uniform rate of taxation of income without differentiating on the basis of the source of income.

Corporate Governance in Financial Intermediaries

Corporate governance must be industry specific in order to deal with the peculiarities of those industries, such as financial institutions. In financial institutions, as in other 'new' types of industry, power is not associated with the ownership of physical assets but rather with access to the use of critical resources. Internal regulatory mechanisms, through suitable HR policies, therefore become important and help to complement the efforts of external regulatory authorities.

Impact of Fiscal Deficit

Fiscal Deficit and Inflation in India: A Study in Nexus by Ashutosh Raravikar;  Macmillan India, 2003; pp x+252, Rs 385

Risks and the Budget

In the Budget for 2003-04 the government has sought to underwrite risks faced by different segments of the population. When governments assume additional risks it is necessary to ask whether the mode of risk mitigation proposed is appropriate and who would benefit from such intervention. An attempt is made here to examine these and related questions in relation to the budget.

Redefining the Debtor-Creditor Relationship

While the ordinance on non-performing assets of financial institutions is a landmark measure to restore the balance between lenders and borrowers and thus move towards better risk-sharing between them, the provisions of the ordinance must be seen as one of a whole gamut of means available for restructuring/settlement of the overdues of the financial system.

Union Budget and Flow of Funds

A look at the budget proposals from the perspective of the likely changes in the flow of funds due to the proposed changes in the structure of tax incentives in the context of the government's borrowing requirement.


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