Busy Season Credit Policy | Advantage zyaada

Tuesday, October 27, 2009

I hate writing influencing stuff for these 'namakool' government people..a true laissez faire capitalist as bollywood would say today - but much as I like to disappoint wooden leg intelligentia (sorry Saugata, not you) and unfortunate colleagues who cannot see the depth and incisiveness of my decisions ( only some times, as most of my followers and poachers would attest from the last 15-20 years, i have quite some intellectual property when it comes to establishing the kingdom's fine traits and setting up the next wins. 

Well, this introduction is probably embedded into my names and branding choices as also in the discussions I have created across all Advantage zyaada properties, and while everyone has decided that the worst is past and we have recovered, the stock markets have finally got the cue,albeit from continuing discussions of interest rate when none are necessary unless a bank offers a loan.

Some of my better endowed readers who are also leader of men would appreciate that it is always tough to appreciate the RBI or the FED if you are in the US and 'get' the inner depths of what is happening, what is doable, what is to be said and what is to be communicated to which stakeholders all at the same time..that is why probably Duvoori Rao had no qualms in handing over the tough job to the 'center' or in this case the Economic Advisory Committee and Mr Rangarajan.

Let's not forget that the RBI is doing a good job yet. With the Aussies having raised interest rates, it might have tempted lesser mortals to go in for rate increases right away, but we have just decided to raise the eponymous SLR a full basis point as banks continue to sidestep economics and lenders in each breath. The most laudable and really India thought centric piece of the policy was the important 150% ramp up in the provisioning of real estate loans to 1% of LTV carried on the books. It is a good reminder to banks that the costs of idle money will go up on both the treasuries and cash they keep ( a huge 35% in most banks, more for Citi) when the statutory rates even now are just 30%. In fact costs will also go up on the RE portfolio they are so eager to cultivate by a good 70-80 basis points, after all the entire provisioning concept for banks is based on being able to sell their collateral in case of default :)

However, next quarter we are suddenly going to get a flurry of results which proclaim greater volumes, no one will talk of pricing constraints, FDI will flow smoothly and I might just get time to read Ranga's economics to take this slow elephant further. And that is how sand castles are blown away and not made into glass, nor kept for posterity. A mixed metaphor, maybe? But it is clearer now that the RBI is just battling select 'investor guarantee' holding bank companies that have never advanced adequate resources ( neither people, nor journalists, nor the money) to India as they reinvent the new way to leverage their own and their host nations ( i almost sound socialist there, but i am laying out the real hidden map where I share economic prowess in predicting the next turn and getting done with the rest of influenza to focus on earning real moolah in a real job / business)

Coming back to the policy, it is a non starter, because it is a tired ramification of pending business like flowing credit and reforms undone by a crisis. The banks are prudent enough to lend only to profit making businesses and the governments are out of money to print at the mint, The government will continue to be the biggest borrowing program, the agrarians will suffer as rabi prices rics and production drops off,  the corporates will bide time as India's holiday season is past though the stats are still due, and the RBI is not handling the fun, neither the EAC by admitting to any innovation. In my eyes, that will slow up this pack of hounds till ( probably just next week, probably just good news) some great FDI and energy releasing decisions come through.  The next RBI ride will last the six months it can raise rates, but finally we have to start signing some good deals and get business done. Simple innovations like co-opting banks in the policy making and making obvious your support of public sector banks with larger balance sheets have to be reflecive of the new media and the new pace of competition where everyone is now ready to drive home their point to their investors and their stakeholders.

Posted via web from The investment blog on Post

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