Apropos of the column “Christening by fire” (FE, August 27), the role of the Reserve Bank of India (RBI) in clearing the air about the interest rates and liquidity is very important. RBI acted in panic to stop the foreign capital outflow as it did not have enough surplus. Inflation has caused growth to tumble in last few years. Sensitivity to inflation is extremely important and it requires rigorous statistical exercise, which the new RBI Governor, Raghuram Rajan, seems capable of. Non-banking financial corporations need to be given more space in the banking sector without imposing some of the norms that banks have to follow. Financial inclusion should be accorded priority. Many NPAs need recovery. However, once financial inclusion is given its due regard, the micro-borrowers won’t demand exclusive arrangements as was seen in the case of big borrowers. The issues of CRR and SLR are of great concern as both are responsible for choking liquidity in the system. RBI needs to caution the government about excessive withdrawal from the treasury.
RK Arya, Faridabad
NSEL should be an e-mandi
Apropos of the column “Lessons from the National Spot Exchange episode” (FE, August 22), the absence of regulation was among the main failings as the government did not act to prevent the scam when the brazen violations were pointed out by the Forward Markets Commission earlier. Nevertheless, allowing a settlement period of 11 days is the initial gateway in the conversion of the exchange into a forwards market. Also, the short sales transactions made the exchange a future market. Indeed, NSEL must serve as an electronic mandi without affecting the interest of the sellers and buyers. At the moment, investors have become the scapegoat because of the gimmicks of the buyers having gotten tempted to make profits in short sales. For a smoother functioning, advance deposits must be received from the buyers and the transaction should be settled within the day itself with electronic payment, and no additional time should be allowed to settle the transaction.
Sivakasi, Tamil Nadu