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From Lehman to Demonetization
From Lehman to Demonetization is the epic story of banking in India in the last decade. The years from 2007 to 2017 were the most tumultuous and exciting time for this sector, which saw D. Subbarao, Raghuram Rajan and Urijit Patel as RBI governors working with finance ministers Pranab Mukherjee, P. Chidambaram and Arun Jaitley.
What a decade it has been-from India's first MFI, SKS Microfinance, entering the capital market to the near death of the industry; the RBI giving the nod to twenty-three banks and becoming an inflation targeter; from 9 per cent economic growth for three consecutive years to the jolt of demonetization.
Featuring essays and interviews with the who's who of this sector, including Deepak Parkeh, K.V. Kamath, Arundhati Bhattacharya, Chanda Kochchar, Aditya Puri, Shikha Sharma, Raghuram Rajan, U.K. Sinha and Viral Acharya, this book makes for a riveting read.
What a decade it has been-from India's first MFI, SKS Microfinance, entering the capital market to the near death of the industry; the RBI giving the nod to twenty-three banks and becoming an inflation targeter; from 9 per cent economic growth for three consecutive years to the jolt of demonetization.
Featuring essays and interviews with the who's who of this sector, including Deepak Parkeh, K.V. Kamath, Arundhati Bhattacharya, Chanda Kochchar, Aditya Puri, Shikha Sharma, Raghuram Rajan, U.K. Sinha and Viral Acharya, this book makes for a riveting read.
384 pages, Paperback
Published January 1, 2017
47 people are currently reading
270 people want to read
About the author
Tamal Bandyopadhyay
18Ìýbooks54ÌýfollowersTamal Bandyopadhyay is an Indian business journalist, known for his weekly column on banking and finance Banker's Trust published in Mint, an Indian business daily brought out by HT Media Ltd. He has authored four books namely From Lehman to Demonetization: A Decade of Disruptions, Reforms and Misadventures Bandhan: The Making of a Bank, Sahara: The Untold Story and A Bank for the Buck.
He is popular for his weekly column on banking and finance called Banker's Trust which is published every Monday. His frequent blog Banker's Trust Real Time on livemint.com analyses major developments in the financial sector.
Between April and November 2011, he ran a 32 episode series on Bloomberg India TV, called Banker's Trust, where senior central bankers, commercial bankers, and economists were interviewed every week.
Releasing Tamal's first book, A Bank for the Buck, in November 2012, then finance minister P Chidambaram said, "In a period of great financial illiteracy, it's refreshing to have a book written by somebody very literate about matters relating to finance". In his foreword to the book, former governor of Reserve Bank of India, Y. Venugopal Reddy, wrote, "It's a sort of recent oral history of a financial institution. Tamal has set a new trend in the dissemination of knowledge."
Tamal's second book, Sahara: The Untold Story, details the beginnings and the current day working of the secretive Sahara India Parivar. Well researched, with umpteen interviews with people concerned including Subrata Roy, the book was also cause of a stay order later requested by the Sahara group. In December 2013, the Sahara India Pariwar, moved Calcutta High Court, got a stay on the publication of the book and filed a Rs 2 billion defamation suit against the author and its publisher, Jaico Publishing House.[8] In April 2014, both the parties reached an out of court settlement following which the book carries a disclaimer by Sahara which says, among other things, the book has "defamatory content" --something unprecedented in Indian publishing history, as narrated in Sue the Messenger by Subir Ghosh, with Paranjoy Guha Thakurta. [9]
He has also published a book of poems in Bengali Anupam Meenrashi in January 2014.
He is popular for his weekly column on banking and finance called Banker's Trust which is published every Monday. His frequent blog Banker's Trust Real Time on livemint.com analyses major developments in the financial sector.
Between April and November 2011, he ran a 32 episode series on Bloomberg India TV, called Banker's Trust, where senior central bankers, commercial bankers, and economists were interviewed every week.
Releasing Tamal's first book, A Bank for the Buck, in November 2012, then finance minister P Chidambaram said, "In a period of great financial illiteracy, it's refreshing to have a book written by somebody very literate about matters relating to finance". In his foreword to the book, former governor of Reserve Bank of India, Y. Venugopal Reddy, wrote, "It's a sort of recent oral history of a financial institution. Tamal has set a new trend in the dissemination of knowledge."
Tamal's second book, Sahara: The Untold Story, details the beginnings and the current day working of the secretive Sahara India Parivar. Well researched, with umpteen interviews with people concerned including Subrata Roy, the book was also cause of a stay order later requested by the Sahara group. In December 2013, the Sahara India Pariwar, moved Calcutta High Court, got a stay on the publication of the book and filed a Rs 2 billion defamation suit against the author and its publisher, Jaico Publishing House.[8] In April 2014, both the parties reached an out of court settlement following which the book carries a disclaimer by Sahara which says, among other things, the book has "defamatory content" --something unprecedented in Indian publishing history, as narrated in Sue the Messenger by Subir Ghosh, with Paranjoy Guha Thakurta. [9]
He has also published a book of poems in Bengali Anupam Meenrashi in January 2014.
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January 28, 2018
Once during casual internet browsing, I halted at rediff.com. I came across an article that featured Tamal Bandyopadhyay. The article was an interview with him regarding the launch of his new book- “From Lehman to Demonetization�. He is a veteran and respected business journalist. I first heard of him, when his book “Sahara:The Untold story� created a huge uproar. He tried to unveil some questionable and dubious activities of Sahara India Parivar. It drew group’s ire and they moved court to seek damage from the author. Later, the group reached an out of settlement with the author and the book was finally out. He has also authored book on HDFC and Bandhan Bank. His interview which was compact in substance, crisp in style and precise in matter drew me towards this book.
What is the book all about? The decade has been a testing time for banking industry. They have gone through turbulent times. The fall of Lehmann brothers caused tremors across the world. The ever increasing bad assets have presented industry with problems of gargantuan proportions. The RBI has been taking some tough measures. The MFI has been huffing and puffing but still playing a significant role in the economy, especially among lower strata of the society. The government is serious about taking the banking operations to the remote corner of the nation through BC model. They have taken measures to curb the flow of black money in the economy. However, in order to implement government decisions, banks are confronted with unforeseen challenges and unrealistic targets. This book contains published essays written by the author himself that narrates the events of the most defining decade of Indian Banking industry. The snippet of the book is given in next few paragraphs.
The iconic bank Lehmann Brothers filed for bankruptcy in Sep�2008. The fall triggered financial crisis and recession across many parts of the world. Was this confounding problem predicted by the experts? Astonishingly, many seemed to have overlooked it. The events that led to its fall were not at all inscrutable in nature. There are few who have predicted the outcome long before. Now what was its impact on India? Prior to Lehmann Brothers fall, there was lot of high credit growth, economy was growing over 9% , bank credit growth was growing at 30% and lot of investments were taking place. The collapse did not impact India much. The aforementioned impressive growth rate came down for a while.To wriggle out of the crisis, the commercial banks started giving loans aggressively and the RBI flooded the system with liquidity .
The banking system in India is ostensibly good. That’s what the message is delivered to the depositor. However if you dig deeper, the scenario is not that rosy. By relaxing policy rates and flooding the system with liquidity, the RBI has been encouraging banks to issue cheap credits. The RBI has also permitted banks to restructure loans if borrowers are finding it difficult to repay. These developments however have not accelerated bank’s growth in any way. On the contrary, growth has been stymied. The bank has been piling up non-performing assets(NPA) year after year. NPA was 2% of loan ten years back. Now it’s 10% of loan and that too excluding the non-structured loans. The quality of assets are going from bad to worse. Albeit, the banks have been in denial mode, but it has landed itself into an imbroglio. The increase in bad loans have eroded bank profitability. Under normal circumstances, a loan is considered bad when the borrower fails to pay interest on it for ninety days. Once the loan turns sticky, the banks are required to provide for it in the balance sheet. Loan restructuring and loan wave off are destroying credit culture. Loan restructuring is benefiting large industrial houses. Farm loan waivers , declared by political party to keep their electoral promises means that farmers who have the ability to repay gets a respite. There are loopholes in the system which smart borrowers are capitalizing for their own benefits.
The book has given maximum coverage on Micro-finance Industry(MFI). Post liberalization, Indian banks were still reluctant to reach credit starved poorer section of the society. There are impediments like operational constraints and banks’s refusal to relax policies for issuance of credit, in order to cater to such section. Under such circumstances, the MFI started filling up the gap. The MFI is defined as business of giving loans to people who do not have access to formal banking services. What is their modus operandi? MFI usually get loans from commercial banks at 13-14% interest and then they lend it at 10% higher, which covers their operating cost and profit. Just a decade back,the MFI was doing extremely well and the sector soon emerged as the largest in the world, with Andhra Pradesh being the major contributor. However in 2010, a promulgation of a state law in Andhra Pradesh put several restrictions on the activities, which encumbered MFI in the state and adversely affected them in the other parts of the country . The banks also demured giving loans to them. The industry which was growing at a breakneck speed at one point of time was in the brink of being eliminated. However, if the development in last couple of years are considered then for the industry , it’s a tale of resurgence, restraint and maturity. By 2016, eight MFI got the RBI license to become small finance banks. The story line has changed. Presently, the RBI has come up with regulations wherein they have put a cap on interest rate and restricted the quantum of loans and borrowers .
There have been some pertinent questions regarding performance of PSU banks. Why they have failed to keep pace with their private sector counterpart? Is there any chances of revival or it remains a dud? For a change, a very sympathetic stand has been taken by the author. Usually most experts have a merciless viewpoint on the subject. There is one key constraint which hamper decision making. The PSU banks are subjected to investigation by Central Bureau of Investigation(CBI) and Central Vigilance Commission(CVC) . They are under the lens of Comptroller and Auditor General of India(CAG). Apart from these, they are also answerable to Ministry of Finance and politicians too. The top bosses are always under a lot of stress.The PSU banks are considered an extended arm of the government. They have to play a responsible role for the society and the nation, albeit at times reluctantly. They invest in certain sector to boost up the economy. They also revive certain sectors. A case in the point are infrastructure and power sector where they have a substantial exposure. The irony is that the Finance Ministry tell banks where to lend the money and how much. They also fix the interest rate. To completely unsettle banks, there have been loan waivers in the past by UPA government. Though the government promises to compensate banks but vision and target of the banks clearly goes for a toss.The government has been trying to provide banking services to the remote corner of the nation through Banking Correspondent or Financial Inclusion model , or better known to most as Pradan Mantri Jan Dhan Yojhna. Obviously, the PSU banks comes into play to fulfill government’s social welfare dreams. Despite many zero or no-frill account, this has failed to gather desired momentum. If a balanced view is taken then PSU alone is not responsible for such an unpropitious state.
In Nov�2016, the government announced scrapping of Rs. 500 and 1000 note. The objective was to scrap corruption and terrorism. As per the report by RBI, 99% of the notes were deposited into the banks. So it can be concluded that demonetization has failed to flush out black money from the economy. However, mobile money and other forms of financial transactions have increased. Small and medium business traders are increasingly embracing digital payments and technology.
Diversity is the buzzword that defines banking industry in the last decade. There have been paradigm shift from conventional mode of banking. Digitization is in top gears. Banks are competing for customer retention and acquisition. The RBI is coming up with different type of banks. The banks especially PSU ones, are trying to take banking facilities to remote corner of the nation. Pradhan Mantri Jan Dhan Yojana has to be in the fast lane for achieving financial inclusion. Unfortunately, disseminating has not taken place in the desired manner. One major fiasco for the government has been Bharatiya Mahila bank. It was a misadventure and the business never took off. It clearly suggest frivolity at times. Two years back, Bandhan Bank and IDFC Bank fought with lot of contenders including corporate heavyweights to successfully emerge in getting the banking license from the RBI. Bandhan Bank has a deep rural penetration and IDFC Bank has embraced technology for offering tech products for customers. These two banks have become a force to reckon with and have compelled other banks to redraw their strategy. So there is lot happening in Banking industry. The book was definitely an informative ride. Usually, I have seen that journalists make a better author. They know the pulse of their reader. A reader who has less exposure to banking operations may not be aware of many banking terms. So the author here has ensured that if he is using any banking terms in his narration then it’s defined and explained first. For example, Cash Reserve Ratio(CRR) and Statutory Liquidity Ration(SLR) were explained for the benefit of the readers before using it multiple times later. That’s the smart way of taking the readers along with your words. His conversation with Banking industry stalwarts like Raghuram Rajan, K.V Kamath, Deepak Parikh, Arundhati Bhattacharya, Shikha Sharma, U.K.Sinha was worth reading. I have missed out some names here. The subject may look dull at the onset but reading first few pages will definitely push you towards the end. The USP is simplified and interesting narration of facts. On the subject, it’s difficult to find a better book than this. I am so much enamoured by the author’s presentation skill that I’ll lay my hand on another book authored by him in future. The book is highly recommended.
What is the book all about? The decade has been a testing time for banking industry. They have gone through turbulent times. The fall of Lehmann brothers caused tremors across the world. The ever increasing bad assets have presented industry with problems of gargantuan proportions. The RBI has been taking some tough measures. The MFI has been huffing and puffing but still playing a significant role in the economy, especially among lower strata of the society. The government is serious about taking the banking operations to the remote corner of the nation through BC model. They have taken measures to curb the flow of black money in the economy. However, in order to implement government decisions, banks are confronted with unforeseen challenges and unrealistic targets. This book contains published essays written by the author himself that narrates the events of the most defining decade of Indian Banking industry. The snippet of the book is given in next few paragraphs.
The iconic bank Lehmann Brothers filed for bankruptcy in Sep�2008. The fall triggered financial crisis and recession across many parts of the world. Was this confounding problem predicted by the experts? Astonishingly, many seemed to have overlooked it. The events that led to its fall were not at all inscrutable in nature. There are few who have predicted the outcome long before. Now what was its impact on India? Prior to Lehmann Brothers fall, there was lot of high credit growth, economy was growing over 9% , bank credit growth was growing at 30% and lot of investments were taking place. The collapse did not impact India much. The aforementioned impressive growth rate came down for a while.To wriggle out of the crisis, the commercial banks started giving loans aggressively and the RBI flooded the system with liquidity .
The banking system in India is ostensibly good. That’s what the message is delivered to the depositor. However if you dig deeper, the scenario is not that rosy. By relaxing policy rates and flooding the system with liquidity, the RBI has been encouraging banks to issue cheap credits. The RBI has also permitted banks to restructure loans if borrowers are finding it difficult to repay. These developments however have not accelerated bank’s growth in any way. On the contrary, growth has been stymied. The bank has been piling up non-performing assets(NPA) year after year. NPA was 2% of loan ten years back. Now it’s 10% of loan and that too excluding the non-structured loans. The quality of assets are going from bad to worse. Albeit, the banks have been in denial mode, but it has landed itself into an imbroglio. The increase in bad loans have eroded bank profitability. Under normal circumstances, a loan is considered bad when the borrower fails to pay interest on it for ninety days. Once the loan turns sticky, the banks are required to provide for it in the balance sheet. Loan restructuring and loan wave off are destroying credit culture. Loan restructuring is benefiting large industrial houses. Farm loan waivers , declared by political party to keep their electoral promises means that farmers who have the ability to repay gets a respite. There are loopholes in the system which smart borrowers are capitalizing for their own benefits.
The book has given maximum coverage on Micro-finance Industry(MFI). Post liberalization, Indian banks were still reluctant to reach credit starved poorer section of the society. There are impediments like operational constraints and banks’s refusal to relax policies for issuance of credit, in order to cater to such section. Under such circumstances, the MFI started filling up the gap. The MFI is defined as business of giving loans to people who do not have access to formal banking services. What is their modus operandi? MFI usually get loans from commercial banks at 13-14% interest and then they lend it at 10% higher, which covers their operating cost and profit. Just a decade back,the MFI was doing extremely well and the sector soon emerged as the largest in the world, with Andhra Pradesh being the major contributor. However in 2010, a promulgation of a state law in Andhra Pradesh put several restrictions on the activities, which encumbered MFI in the state and adversely affected them in the other parts of the country . The banks also demured giving loans to them. The industry which was growing at a breakneck speed at one point of time was in the brink of being eliminated. However, if the development in last couple of years are considered then for the industry , it’s a tale of resurgence, restraint and maturity. By 2016, eight MFI got the RBI license to become small finance banks. The story line has changed. Presently, the RBI has come up with regulations wherein they have put a cap on interest rate and restricted the quantum of loans and borrowers .
There have been some pertinent questions regarding performance of PSU banks. Why they have failed to keep pace with their private sector counterpart? Is there any chances of revival or it remains a dud? For a change, a very sympathetic stand has been taken by the author. Usually most experts have a merciless viewpoint on the subject. There is one key constraint which hamper decision making. The PSU banks are subjected to investigation by Central Bureau of Investigation(CBI) and Central Vigilance Commission(CVC) . They are under the lens of Comptroller and Auditor General of India(CAG). Apart from these, they are also answerable to Ministry of Finance and politicians too. The top bosses are always under a lot of stress.The PSU banks are considered an extended arm of the government. They have to play a responsible role for the society and the nation, albeit at times reluctantly. They invest in certain sector to boost up the economy. They also revive certain sectors. A case in the point are infrastructure and power sector where they have a substantial exposure. The irony is that the Finance Ministry tell banks where to lend the money and how much. They also fix the interest rate. To completely unsettle banks, there have been loan waivers in the past by UPA government. Though the government promises to compensate banks but vision and target of the banks clearly goes for a toss.The government has been trying to provide banking services to the remote corner of the nation through Banking Correspondent or Financial Inclusion model , or better known to most as Pradan Mantri Jan Dhan Yojhna. Obviously, the PSU banks comes into play to fulfill government’s social welfare dreams. Despite many zero or no-frill account, this has failed to gather desired momentum. If a balanced view is taken then PSU alone is not responsible for such an unpropitious state.
In Nov�2016, the government announced scrapping of Rs. 500 and 1000 note. The objective was to scrap corruption and terrorism. As per the report by RBI, 99% of the notes were deposited into the banks. So it can be concluded that demonetization has failed to flush out black money from the economy. However, mobile money and other forms of financial transactions have increased. Small and medium business traders are increasingly embracing digital payments and technology.
Diversity is the buzzword that defines banking industry in the last decade. There have been paradigm shift from conventional mode of banking. Digitization is in top gears. Banks are competing for customer retention and acquisition. The RBI is coming up with different type of banks. The banks especially PSU ones, are trying to take banking facilities to remote corner of the nation. Pradhan Mantri Jan Dhan Yojana has to be in the fast lane for achieving financial inclusion. Unfortunately, disseminating has not taken place in the desired manner. One major fiasco for the government has been Bharatiya Mahila bank. It was a misadventure and the business never took off. It clearly suggest frivolity at times. Two years back, Bandhan Bank and IDFC Bank fought with lot of contenders including corporate heavyweights to successfully emerge in getting the banking license from the RBI. Bandhan Bank has a deep rural penetration and IDFC Bank has embraced technology for offering tech products for customers. These two banks have become a force to reckon with and have compelled other banks to redraw their strategy. So there is lot happening in Banking industry. The book was definitely an informative ride. Usually, I have seen that journalists make a better author. They know the pulse of their reader. A reader who has less exposure to banking operations may not be aware of many banking terms. So the author here has ensured that if he is using any banking terms in his narration then it’s defined and explained first. For example, Cash Reserve Ratio(CRR) and Statutory Liquidity Ration(SLR) were explained for the benefit of the readers before using it multiple times later. That’s the smart way of taking the readers along with your words. His conversation with Banking industry stalwarts like Raghuram Rajan, K.V Kamath, Deepak Parikh, Arundhati Bhattacharya, Shikha Sharma, U.K.Sinha was worth reading. I have missed out some names here. The subject may look dull at the onset but reading first few pages will definitely push you towards the end. The USP is simplified and interesting narration of facts. On the subject, it’s difficult to find a better book than this. I am so much enamoured by the author’s presentation skill that I’ll lay my hand on another book authored by him in future. The book is highly recommended.
February 7, 2021
Just finished reading ‘From Lehman to Demonetization: A Decade of Disruptions, Reforms and Misadventures� by Tamal Banyopadhyay (pgs. 348)
Last year, when I read ‘Backstage: The story behind India’s high growth years� by Montek Singh Ahluwalia, I was greatly impressed with his narration of India’s smooth journey through the global economic crisis in 2008, tackling poverty by lifting 250 million out of it, ending India’s nuclear apartheid, followed by high economic growth clocking at 10%. Montek Singh’s book chronicled the seventy years of India’s economic history. Similarly, I wish someone would write a book on the history of banking and finance in India. So far, the best I could find was this book written by Tamal Banyopadhyay, which captures the most important decade in Indian history when it comes to banking and finance, between 2007 and 2017. This decade was marked by important events in global banking, economics and finance, starting with the Lehman Brother filing for bankruptcy and ending with a highly debated and controversial decision of demonetizing high value currency notes of India, towards the end of 2016.
Firstly, when the author started this book with acknowledgments stating, “Let me admit that I am not a student of finance. Being a student of English literature…�, I wanted to personally email him after finishing the book, because nothing is more impressive and inspiring than coming across someone who is eager to learn and broaden his horizon outside his academic credentials. The quality of essays presented in this book deserves praise and applause. Ultimately, when the former RBI governors and finance minister have appreciated this book and written foreword for it, I quickly realised I am nobody to send him a mail saying ‘You did great work and I was thoroughly impressed.� Often, some appreciation sounds puny, though it is genuine. I thoroughly enjoyed reading this book because no matter how many times I read about the global financial crisis of 2008, the topic never fails to excite me. I know such kind of description sound sadistic, but the fact that how India remained greatly unaffected by the global financial crisis in 2008 needs to studied again and again. How can the faulty mortgage policy and housing loans in United States affect the global financial markets? How India managed to slide through a rocky terrain unaffected? In this book, the author delves into the back story behind RBI’s conservative policy of not allowing the Indian banks to take excessive risks and exposure towards foreign investment agencies, much before in 2000 when it conducted series of stress tests of the banks investment portfolios and eventually ring fencing the Indian banks from future turmoil.
Series of essays on financial inclusion in this book are must read for anyone who is interested in understanding the problem faced by Indian banks and the need for structural reforms in it. The data provided by the author tells an alarming story of Indians who are left out. He explains,
“Barely 4 per cent of the Indian population invest in mutual funds. The comparable figure for the US is 31 per cent. Only 3 per cent of the population hold a demat account and nearly 80 per cent of the Indian population is without life and health insurance coverage. Only 5.2 per cent of India’s villages have bank branches.�
In his book ‘Who Moved My Interest Rate?� ex-RBI Governor Duvvuri Subbarao had narrated his confrontation with ministry of finance on several occasions, often asserting autonomy. The case that triggered the spat between SEBI and IRDA in 2010 on the jurisdiction over ULIP was first handed over to the judiciary. However, when Pranab Mukherjee intervened to pass a resolution that questioned RBI’s autonomy, Subbarao immediately expressed his displeasure and disappointment to P Chidambaram in a public letter. This entire episode which happened in 2010, when the president promulgated a quick fix ordinance amending the Insurance Act and settling the matter in favour of IRDA, without consulting with RBI is well documented in this book. The tussle between the Government and the RBI has long historical traditions. Subbarao’s predecessor Y.V. Reddy also had confronted Ministry of Finance on policy issues often related to the autonomy of the RBI. In fact, this history of tussle between RBI Governors and Ministry of Finance is as old as the RBI itself. Sir Osborne Smith, first RBI Governor was forced to resign by the British government. Sir Benegal Rama Rao, longest serving RBI Governor to date (who resigned later), was also a victim of his frosty relationship with then Finance Minister TT Krishnamachary under Prime Minister Jawaharlal Nehru. In this book, the author argues that, while the major concern of financial ministry is growth, RBI’s concern will always be about inflation. So, he advocates for decentralization and classification of such roles which will yield amicable results when both confront each other, again.
My favourite chapters in this book were essays on Non-Performing Assets (NPA) and the case of Vijay Mallya’s wilful defaulting of loans. While Raghuram Rajan had written extensively about his stint in exposing the Non-Performing Assets (NPA) when he took over the RBI in his book ‘I Do What I Do�, these essays gives a detailed account on how a sticky loan become a Non Performing Asset once it moves to various Special Mentions Account (SMA). I would recommend this book to the ‘politically and economically left� inclined readers who oppose every move to bring in structural reforms to the Indian Banks (through unions and lobbies), in order to understand the depth of the crisis in a better way. This book also highlights the importance of NPA ordinance passed in 2017 as a key to bad loan resolution. While the private players are performing well in banking, the state owned banks which account for 70 per cent of the Indian Banks with their large balance sheets and non-performing assets piling up every fiscal year, stymie the economic progress. In these chapters, the author explained meticulously in layman terms that ‘without a healthy banking system, the economy cannot run full throttle.�
What I really enjoyed about this book is the author’s witty and comical writing with subtle humour on many occasions. For an instance, arguing the case of left’s antagonism and rhetoric against businessmen and industrialists, he writes:
“Globally, business failures and commercial decisions going wrong are a reality, but can we criminalize business failures? Indeed, we can shift the focus and decide to become an agrarian economy, but even that won’t solve the problem as farm loan waivers will remain a threat to the banking system’s health and credit culture�.
Writing between November 10 and December 30, 2016 on demonetization, the author was found to be high on optimism (like the majority of us). I did not find the author’s optimism about demonetization to be wise or even convincing. In one of his essays under financial inclusion, he says that only four per cent of the population invest in mutual funds and some minuscule population in stock market. On the flipside, he attributes the rising market indices and sale of mutual funds as the positive effect of demonetization. I differ with the author here. The four per cent of population who invest in mutual funds or four crore demat account holders doesn’t represent the lower strata of Indian financial pyramid. Wiping out 86% of the currency notes from circulation was the first nail in the coffin of MSME’s and unorganized sector and ever since then our economy is struggling. Maybe, if Tamal Bandyopadhyay decides to write a book on Indian finance between 2014 and 2024, I believe he will have a different say on this topic.
Finally, towards the end of this book, there were essays on fifteen people, the seminal leaders, who best exemplified the transformation of Indian financial sector in past decade (2007 � 2017). These essays involving Arundhathi Bhatacharya, Raghuram Rajan and Viral V. Acharya tells us the complex stories of Indian Financial and Banking Sector which involves enormous challenges. One such story is of Arundhathi Bhattacharya, who joined as a probationary officer in SBI after her graduation in 1977, later became the first Woman Chairman in State Bank’s 208 year old history, even superseding three senior colleagues in 2013. I would recommend these essays for anyone who wants to become a banker or anyone who is working in a bank to gain inspiration amidst their tiring and despairing journey.
Last year, when I read ‘Backstage: The story behind India’s high growth years� by Montek Singh Ahluwalia, I was greatly impressed with his narration of India’s smooth journey through the global economic crisis in 2008, tackling poverty by lifting 250 million out of it, ending India’s nuclear apartheid, followed by high economic growth clocking at 10%. Montek Singh’s book chronicled the seventy years of India’s economic history. Similarly, I wish someone would write a book on the history of banking and finance in India. So far, the best I could find was this book written by Tamal Banyopadhyay, which captures the most important decade in Indian history when it comes to banking and finance, between 2007 and 2017. This decade was marked by important events in global banking, economics and finance, starting with the Lehman Brother filing for bankruptcy and ending with a highly debated and controversial decision of demonetizing high value currency notes of India, towards the end of 2016.
Firstly, when the author started this book with acknowledgments stating, “Let me admit that I am not a student of finance. Being a student of English literature…�, I wanted to personally email him after finishing the book, because nothing is more impressive and inspiring than coming across someone who is eager to learn and broaden his horizon outside his academic credentials. The quality of essays presented in this book deserves praise and applause. Ultimately, when the former RBI governors and finance minister have appreciated this book and written foreword for it, I quickly realised I am nobody to send him a mail saying ‘You did great work and I was thoroughly impressed.� Often, some appreciation sounds puny, though it is genuine. I thoroughly enjoyed reading this book because no matter how many times I read about the global financial crisis of 2008, the topic never fails to excite me. I know such kind of description sound sadistic, but the fact that how India remained greatly unaffected by the global financial crisis in 2008 needs to studied again and again. How can the faulty mortgage policy and housing loans in United States affect the global financial markets? How India managed to slide through a rocky terrain unaffected? In this book, the author delves into the back story behind RBI’s conservative policy of not allowing the Indian banks to take excessive risks and exposure towards foreign investment agencies, much before in 2000 when it conducted series of stress tests of the banks investment portfolios and eventually ring fencing the Indian banks from future turmoil.
Series of essays on financial inclusion in this book are must read for anyone who is interested in understanding the problem faced by Indian banks and the need for structural reforms in it. The data provided by the author tells an alarming story of Indians who are left out. He explains,
“Barely 4 per cent of the Indian population invest in mutual funds. The comparable figure for the US is 31 per cent. Only 3 per cent of the population hold a demat account and nearly 80 per cent of the Indian population is without life and health insurance coverage. Only 5.2 per cent of India’s villages have bank branches.�
In his book ‘Who Moved My Interest Rate?� ex-RBI Governor Duvvuri Subbarao had narrated his confrontation with ministry of finance on several occasions, often asserting autonomy. The case that triggered the spat between SEBI and IRDA in 2010 on the jurisdiction over ULIP was first handed over to the judiciary. However, when Pranab Mukherjee intervened to pass a resolution that questioned RBI’s autonomy, Subbarao immediately expressed his displeasure and disappointment to P Chidambaram in a public letter. This entire episode which happened in 2010, when the president promulgated a quick fix ordinance amending the Insurance Act and settling the matter in favour of IRDA, without consulting with RBI is well documented in this book. The tussle between the Government and the RBI has long historical traditions. Subbarao’s predecessor Y.V. Reddy also had confronted Ministry of Finance on policy issues often related to the autonomy of the RBI. In fact, this history of tussle between RBI Governors and Ministry of Finance is as old as the RBI itself. Sir Osborne Smith, first RBI Governor was forced to resign by the British government. Sir Benegal Rama Rao, longest serving RBI Governor to date (who resigned later), was also a victim of his frosty relationship with then Finance Minister TT Krishnamachary under Prime Minister Jawaharlal Nehru. In this book, the author argues that, while the major concern of financial ministry is growth, RBI’s concern will always be about inflation. So, he advocates for decentralization and classification of such roles which will yield amicable results when both confront each other, again.
My favourite chapters in this book were essays on Non-Performing Assets (NPA) and the case of Vijay Mallya’s wilful defaulting of loans. While Raghuram Rajan had written extensively about his stint in exposing the Non-Performing Assets (NPA) when he took over the RBI in his book ‘I Do What I Do�, these essays gives a detailed account on how a sticky loan become a Non Performing Asset once it moves to various Special Mentions Account (SMA). I would recommend this book to the ‘politically and economically left� inclined readers who oppose every move to bring in structural reforms to the Indian Banks (through unions and lobbies), in order to understand the depth of the crisis in a better way. This book also highlights the importance of NPA ordinance passed in 2017 as a key to bad loan resolution. While the private players are performing well in banking, the state owned banks which account for 70 per cent of the Indian Banks with their large balance sheets and non-performing assets piling up every fiscal year, stymie the economic progress. In these chapters, the author explained meticulously in layman terms that ‘without a healthy banking system, the economy cannot run full throttle.�
What I really enjoyed about this book is the author’s witty and comical writing with subtle humour on many occasions. For an instance, arguing the case of left’s antagonism and rhetoric against businessmen and industrialists, he writes:
“Globally, business failures and commercial decisions going wrong are a reality, but can we criminalize business failures? Indeed, we can shift the focus and decide to become an agrarian economy, but even that won’t solve the problem as farm loan waivers will remain a threat to the banking system’s health and credit culture�.
Writing between November 10 and December 30, 2016 on demonetization, the author was found to be high on optimism (like the majority of us). I did not find the author’s optimism about demonetization to be wise or even convincing. In one of his essays under financial inclusion, he says that only four per cent of the population invest in mutual funds and some minuscule population in stock market. On the flipside, he attributes the rising market indices and sale of mutual funds as the positive effect of demonetization. I differ with the author here. The four per cent of population who invest in mutual funds or four crore demat account holders doesn’t represent the lower strata of Indian financial pyramid. Wiping out 86% of the currency notes from circulation was the first nail in the coffin of MSME’s and unorganized sector and ever since then our economy is struggling. Maybe, if Tamal Bandyopadhyay decides to write a book on Indian finance between 2014 and 2024, I believe he will have a different say on this topic.
Finally, towards the end of this book, there were essays on fifteen people, the seminal leaders, who best exemplified the transformation of Indian financial sector in past decade (2007 � 2017). These essays involving Arundhathi Bhatacharya, Raghuram Rajan and Viral V. Acharya tells us the complex stories of Indian Financial and Banking Sector which involves enormous challenges. One such story is of Arundhathi Bhattacharya, who joined as a probationary officer in SBI after her graduation in 1977, later became the first Woman Chairman in State Bank’s 208 year old history, even superseding three senior colleagues in 2013. I would recommend these essays for anyone who wants to become a banker or anyone who is working in a bank to gain inspiration amidst their tiring and despairing journey.
June 2, 2018
This book is nothing more than the collection of articles that Mr Bandyopadhyay has written over his career as a financial journalist under various news agencies (primarily Livemint) regarding the some or the other branch of our financial sector. The best part of this book is that it is not chronological in order, instead, it has been divided into chapters which explain the particular topic and all the articles on that subject are arranged accordingly
Commercial Banking, Micro-Finance Industry, Mutual Fund Business, Insurance Business, Investment Banking, you name it and the sector has seen phenomenal growth in the past decade. India is Asia's 3rd largest economy now after China and Japan and only a handful of people are using conventional financial avenues in India. This highlights the potential and along-with it, the risks. Public Sector Banks in India form 70% of the banking and 21 in total but instead of leveraging this, they have time and again proven to be the source of agony for the whole sector in India about which, the author talks about in detail
In developed countries, retail customers opt for bank loans for there small personal needs like car/house etc. Government is responsible for building up the basic infrastructure which includes roads, electricity poles etc. Big corporations raise their share of money through market by releasing bonds. In this way, the burden of finances are evenly distributed. In India, retail loans don't form the chunk of loan books of most of the banks and especially PSBs. Here, people take loan from banks, big corporations take their loans from bank and in order to build the basic infrastructure as well government takes loan from banks. This mechanism puts Indian banking sector extreme duress and likelihood of due diligence being followed behind every loan decreases
Its an interesting read especially for someone who likes to keep track of the financial sector in India
Commercial Banking, Micro-Finance Industry, Mutual Fund Business, Insurance Business, Investment Banking, you name it and the sector has seen phenomenal growth in the past decade. India is Asia's 3rd largest economy now after China and Japan and only a handful of people are using conventional financial avenues in India. This highlights the potential and along-with it, the risks. Public Sector Banks in India form 70% of the banking and 21 in total but instead of leveraging this, they have time and again proven to be the source of agony for the whole sector in India about which, the author talks about in detail
In developed countries, retail customers opt for bank loans for there small personal needs like car/house etc. Government is responsible for building up the basic infrastructure which includes roads, electricity poles etc. Big corporations raise their share of money through market by releasing bonds. In this way, the burden of finances are evenly distributed. In India, retail loans don't form the chunk of loan books of most of the banks and especially PSBs. Here, people take loan from banks, big corporations take their loans from bank and in order to build the basic infrastructure as well government takes loan from banks. This mechanism puts Indian banking sector extreme duress and likelihood of due diligence being followed behind every loan decreases
Its an interesting read especially for someone who likes to keep track of the financial sector in India
February 13, 2018
This book enlightens the readers about the deep rooted problems in Indian Banking system and helps deciphering the cause and impacts of important financial events in India in the last decade. It also provides a glimpse into the lives and achievements of the eminent personalities of Indian Financial system. The book is actually an organised collection of the newspaper columns written by the Author in the last decade and thus it acts as a good primer on Indian Financial system. However, it fails to dig deep in any of the topic it covers. The interviews done with the eminent personalities are around less important details like food preferences and lifestyles instead of focusing on the stuff that actually matters. I would recommend this book to anybody who wants to get a flavor of Indian Banking and Financial system but definitely not for people for deep insights in the same area.
March 1, 2018
The book weaves a series of articles in Mint that the author has written over the years into a coherent story of the last ten years of Indian banking. There are a lot of insights and stories in the book, all written in Tamal’s usual brilliant writing style. Because these were originally independent articles, there is some repetition from one chapter to the other that can be irksome at times.
November 28, 2018
Good understanding of Indian banking sector, from structure to operations.
November 21, 2020
This is a brilliant book (compilation of essays and articles) that covers a most comprehensive range of issues spanning the banking sector in India. There is hardly any other book that brings out in such detail the salient developments and debates on Indian banking related issues. Add to that Tamal's rich knowledge of history and his journalistic access to insiders and stalwarts of the industry, which makes the book a delight to read and definitely leads to knowledge addition and appreciation of the linkages and challenges in the banking industry.
The book is divided in 8 parts - Lehman Days, Microfinance, PSBs, Banking Reforms, Bad Loans, Corruption, RBI & the Finance Ministry and Demonetisation. At the end there is also a separate part covering candid interviews with stalwarts of the banking industry like Raghuram Rajan, KV Kamath, Viral Acharya, Deepak Parekh, Arundhati Bhattacharya, UK Sinha, V Vaidyanathan, etc.
The book has received high praise from the industry greats and the foreword has been penned by KV Kamath. Authoritative and lucid, Tamal covers the policy issues and the practical reality of the events that unfolded in the last decade in Indian finance in a most comprehensive manner. For the world of banking, he certainly is one of the keenest observers.
The book is divided in 8 parts - Lehman Days, Microfinance, PSBs, Banking Reforms, Bad Loans, Corruption, RBI & the Finance Ministry and Demonetisation. At the end there is also a separate part covering candid interviews with stalwarts of the banking industry like Raghuram Rajan, KV Kamath, Viral Acharya, Deepak Parekh, Arundhati Bhattacharya, UK Sinha, V Vaidyanathan, etc.
The book has received high praise from the industry greats and the foreword has been penned by KV Kamath. Authoritative and lucid, Tamal covers the policy issues and the practical reality of the events that unfolded in the last decade in Indian finance in a most comprehensive manner. For the world of banking, he certainly is one of the keenest observers.
April 1, 2018
This book is a collection of articles written by the author in newspapers over his career as a journalist (2007-2017). I really enjoy reading his pieces in Mint newspaper but collecting them and presenting as a book took some juice away from them. This could have been a lot better had it be written as a proper book with more analysis and commentary. The quality of articles is no doubt good but I stopped reading as these were just news pieces and I knew almost all of it for recent events (post 2015).
July 15, 2023
It's a good read for someone who wants to understand the financial situation from India majorly from 2007-2017. Some excerpts shared in the book and detailed conversation with renowned people from the Indian Finance Industry gives deeper insights into the lives of finance and banking professionals. The only caveat is that the book contains a lot of statistics that might seem outdated and unrelatable in the current time. Nonetheless, it offers some good lessons and perspectives.
August 19, 2020
It's a chronicle of the Indian banking and financial industry over a decade which finishes with bite-sized interviews over lunch with fifteen of the most important people in the Indian financial industry.
A must book for anyone who wants to know what happened in the Indian financial sector between these two era defining moments of the crash of Lehman Brothers to the night of Demonetization.
A must book for anyone who wants to know what happened in the Indian financial sector between these two era defining moments of the crash of Lehman Brothers to the night of Demonetization.
February 15, 2021
I won't say it's a great book. But it gives an inside perspective of banking in India. Got to learn a bit about how banking works in India , how the RBI, finance ministers, and other financial institutions work to maintain financial stability of the country and the problems we are facing as a nation.
All in all I enjoyed reading it
All in all I enjoyed reading it
May 6, 2019
A loose collection of all articles published in Mint. I am generally not in favor of article collections being touted as a book. However, Tamal has an engaging writing style but can also notice style repetition.
December 8, 2017
Got it from
buy after comparing prices across online bookstores in India
buy after comparing prices across online bookstores in India
January 14, 2018
Long history of short period
It is very interesting book and worth reading for students of finance.
I really liked story telling skill of author.
It is very interesting book and worth reading for students of finance.
I really liked story telling skill of author.
June 4, 2019
Lots of finance terms to ponder upon - which makes it an exciting read for someone who’s still trying to make sense of the finance world. Super engaging!
December 19, 2021
Tracking the Indian Financial Services Industry over a decade can be a behemoth task and also make for an exhilarating read. And Tamal Bandyopadhyay is a very credible voice to do the same. This book however is a collection of articles written by him that appeared over the last decade in news publications, grouped into thematics covered in the book. The facts are repetitive across articles, the narrative is absent and does not do justice to 10 years worth of coverage of the BFSI industry. Some anecdotes are fascinating though. Also notably, reading it in 2021, one realises that not much has changed and many reforms have simply stayed on papers only.
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