Something About The Law

I am unable to decide if this would fall within “law”, but then law–>policy, policy–>law is not a rare phenomenon. Anyway, this opinion in the Hindu by C. Rammanohar Reddy of the EPW makes an interesting read.

While the entire opinion can be found here, the basic issue is the latest application by India to the World Bank for a $ 3 billion loan. Mr. Reddy is of the view that Indian Banks have fared great in the recent financial turmoil primarily because of the Central Bank supervision. They have enough liquidity, indeed, 3 % more than the requirement. But if more is needed for longer term lending, World Bank is not the only option. He cites the example of China which recapitalized about four of its major banks through foreign exchange reserves. According to Mr. Reddy, India can easily pull out $ 3 billion from its $ 465 billion foreign exchange reserve. This way, all arguments of conditionalities relating to the WB loans and its supposedly-capitalist policies of loans and grants (depends on which side of the debate you are) can be avoided and the banks can ensure enough liquidity for themselves and sufficient lending to the Indian public in the years to come.

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