30 Sept 2019: The Hindu Editorial Summary
1) On Punjab and Maharashtra Co-operative Bank issue
- It has been a nightmare of a week for thousands of customers of the Punjab and Maharashtra Co-operative Bank, who were told last Tuesday by the Reserve Bank of India that no more than ₹1,000 could be withdrawn from their accounts for a period of six months.
- The 35-year-old lender may not be the first but is certainly one of the largest urban co-operative banks facing this clampdown. The resultant distress is also more widespread as the bank, with a large footprint in Maharashtra, is also present in Delhi, Goa, Gujarat, and Karnataka.
- Strikingly there was no imitative sign of distress to trigger the bank’s virtual collapse, following the regulator’s intervention. Things were going swimmingly as per its latest annual report, with deposits growing nearly 17% year-on-year to ₹11,617 crore by March 2019, with long-tenure savings accounting for the largest chunk.
- Profits, in a tough year for banks, were flat, and while bad loans more than doubled, their proportion was far lower at PMC than at most public sector banks. Given this backdrop, the bank’s depositors, who ironically include the RBI’s own employees’ co-operative, are understandably perturbed about the fate of their savings.
- The RBI has said it is acting in depositors’ interests after ‘financial irregularities, failure of internal control and systems of the bank and under-reporting of exposures’ came to its notice and on Thursday, raised the withdrawal limit to ₹10,000 per account, stressing this should allow 60% of its depositors to recover their entire savings.
- The RBI must still explain what made it increase the withdrawal limit ten-fold within 48 hours, lest it be seen as a politically weighted move ahead of the Maharashtra election.
- Questions have been raised on the bank’s large exposure to Housing Development and Infrastructure Limited (HDIL) which is itself undergoing insolvency proceedings.
- The bank’s chairman had served on the board of the HDIL for ten years between two long stints at the bank, and any irregularities in loans to the firm would be an indictment of the quality of oversight on banks.
- That the RBI shares regulatory responsibilities over such banks with States’ Registrar of Co-operative Societies further mires the problem. With over 1,500 urban co-operative banks operating in the country, and a few of them already under RBI-imposed restrictions.
- A new road map is essential for its future course. Perhaps the only major gain from demonetisation was the deployment of public savings into the formal financial sector. But failures like PMC Bank can quickly erode that.
- Time-bound, transparent action to fix the PMC mess and a systemic overhaul is necessary to prevent cash from moving back below household mattresses. Failures such as PMC Bank’s must be pre-empted to retain public faith in the system.
2) On India’s rightful place in the world
- Prime Minister Narendra Modi’s speech at the UNGA catalogued welfare and development schemes that he had initiated. He sounded like a visionary in his call for unity of humanity, but it was his emphasis on Indian diversity that stood out for its remarkable departure from the sort of domestic politics he and his party, the BJP, have come to be associated with lately.
- India’s achievements in housing, sanitation, health care, banking and education are significant, as the PM noted. His tenacious public campaign on issues such as water conservation, environment and girls’ education has brought these issues to the centre of the development discourse and he deserves full credit for it.
- Mr. Modi has consistently presented material development as an end in itself, sometimes ignoring that it might be at the cost of other markers of progress such as expansion of freedoms and equity.
- This idea is also the explanation of his government’s policy on Jammu and Kashmir, as reflected in his own pronouncements and those of other officials, during their diplomatic outreach in the U.S.
- A Prime Minister’s use of a global platform to showcase India’s progress and diversity to a world that is divided, and deliver a message of unity, would have been inspiring for all Indians. But his UNGA speech sits at odds with his campaign speeches at home, and corresponding administrative measures.
- The claim that there can be a neat insulation of internal issues of a country from global concerns is antithetical to the rationale of all global institutions, particularly the UN.
- Populist politics around the world has sought to privilege national sovereignty over universal values and commitments, slacking off efforts to tackle critical challenges that are transnational.
- Human rights, democracy and liberty are as much global questions as climate change, health and terrorism. Selective globalisation is difficult to sustain or defend.
- India cannot aspire to meet global best practices in governance, infrastructure and investment climate on the one hand and on the other, choose to overlook soft power attributes such as tolerance, pluralism and diversity.
- Pakistan Prime Minister Imran Khan’s bluster on Kashmir and the implied threat of a nuclear war were irresponsible and over the top, but that is beside the point. India cannot wish away questions regarding Kashmir at international fora.
- Tamil poet Kaniyan Pungundranar’s verse Yaadhum Oore Yaavarum Kelir - all places are our own, everyone is our kin - that Mr. Modi cited to underscore India’s ancient faith in universalism is a tenet far from fulfilment, but worth striving for.
- Deviation from it could be detrimental, and would have consequences at home and abroad. The best and the only way to keep domestic issues domestic is to resolve them through internal dialogue and accommodation. India must take its place in the world by privileging universal rights everywhere.