RBI fans

Reserve Bank of India has come out vindicated in its 'conservative' approach during the boom years. Remembered that again today with the Business Standard's piece by Jamal Mecklai on the coming of age of the Indian rupee.

Here are a couple of links in praise of the RBI and former Governor Reddy.

This one by TCA Srinivasa Raghavan when the Turner Report came out

and this one in the New York Times last December on How India avoided a crisis

Both go to show how context matters in policy and regulation.

I had also written a piece in Financial Express a couple of months back explaining the foreign bank branch licencing policy as well, main conclusion being:

... is the branch authorisation policy really liberal or is RBI being a stick in the mud? The answer lies in the emphasis on ‘reciprocity’. According to the US 2009 National Trade Estimate Report of Foreign Trade Barriers, “Under India’s branch authorisation policy, foreign banks are required to submit their internal branch expansion plans on an annual basis, but their ability to expand is severely limited by nontransparent quotas on branch office expansion.’

However, in a speech to the Bankers Conference in 2007, RBI deputy governor, V Leeladhar stated that between 2003 and 2007, 75 branch licences had been given to foreign banks, out of which 19 were for US-based banks. Yet, during the same period, the US had not authorised any expansion of Indian banks, despite requests for 3 branches, 2 subsidiaries and 9 representative offices, some of which were pending for more than 5 years.

This tu tu main main is a hallmark of reciprocal access negotiations, but just goes to show that there are ample grey areas, even in something that may seem so simple as branch authorisation.