CASINO BANKING …!
Recently Reserve Bank Governor D SUBBARAO had warned against “casino banking” that has over- financialised the real economy, and called for inclusive growth to quell the growing disenchantment of the public.
On reading the article in BUSINESS STANDARD, I had written a letter to the Editor expressing my views on the matter.Here is what I had written:
Dear Sir,
This refers to your news item titled: “‘Casino banking’ can put us in danger: Subbarao” (BS 18th Nov 2012).
One more interesting terminology has been added to the existing vocabulary of bankers and students of financial management. “ Casino Banking ” has been termed as the practice whereby a commercial bank engages in unduly speculative or risky financial activities with the aim of achieving high profits. Some years ago (2009) the term “Narrow Banking” had been in vogue.A ‘Narrow Bank’ in its narrow sense, had then been defined as the system of banking under which a bank places its funds in risk-free assets with maturity period matching its liability maturity profile, so that there is no problem relating to asset liability mismatch and the quality of assets remains intact without leading to emergence of sub-standard assets. This extreme risk averse-ness has been also dubbed as “Lazy Banking ” and “Zombie Banking “. Other such terms often referred to are :” Class Banking”, ”Mass Banking”, ” Inclusive Banking”, “ Logical Banking”, ” Safe Banking”, “ Social Banking”, ”Universal Banking”, etc.What next ? “ Sitting-on-the-fence Banking” ( neither going this way nor that ?) , ” Water-on-the-duck’s-back Banking” ( no policy guidelines ever affect this sector ? ). Perhaps its time for RBI to come out with an A to Z Primer (A for “Arm-Chair Banking” , Z for “ Zombie Banking ”) to educate the lay man and the common customer/ investor, about such interesting definitions!
One more interesting terminology has been added to the existing vocabulary of bankers and students of financial management. “ Casino Banking ” has been termed as the practice whereby a commercial bank engages in unduly speculative or risky financial activities with the aim of achieving high profits. Some years ago (2009) the term “Narrow Banking” had been in vogue.A ‘Narrow Bank’ in its narrow sense, had then been defined as the system of banking under which a bank places its funds in risk-free assets with maturity period matching its liability maturity profile, so that there is no problem relating to asset liability mismatch and the quality of assets remains intact without leading to emergence of sub-standard assets. This extreme risk averse-ness has been also dubbed as “Lazy Banking ” and “Zombie Banking “. Other such terms often referred to are :” Class Banking”, ”Mass Banking”, ” Inclusive Banking”, “ Logical Banking”, ” Safe Banking”, “ Social Banking”, ”Universal Banking”, etc.What next ? “ Sitting-on-the-fence Banking” ( neither going this way nor that ?) , ” Water-on-the-duck’s-back Banking” ( no policy guidelines ever affect this sector ? ). Perhaps its time for RBI to come out with an A to Z Primer (A for “Arm-Chair Banking” , Z for “ Zombie Banking ”) to educate the lay man and the common customer/ investor, about such interesting definitions!
J S BROCA,NEW DELHI
Dear Readers,
My comments are displayed below the article on the web site of BUSINESS STANDARD.
Here is the link:
http://www.business-standard.com/india/news/casino-banking-can-put-us-in-danger-subbarao/196137/on
Read and comment.
J S BROCA
New Delhi
19th Nov 2012
DEAR READERS,
MY LETTER HAS BEEN NOW PUBLISHED IN TODAY’S(29TH NOV) FINANCIAL EXPRESS TOO.
HERE IS THE LINK :
http://old.financialexpress.com/news/letters-to-the-editor/1037821/0
Here is the text :
Banking’s new lingo
This refers to the news item titled “Subbarao warns against casino banking” (FE, November 18). One more interesting term has been added to the existing vocabulary of bankers and students of financial management. “Casino banking” has been termed as the practice whereby a commercial bank engages in unduly speculative or risky financial activities with the aim of achieving high profits. Some years ago (2009), the term “narrow banking” had been in vogue. A narrow bank, in its narrow sense, had then been defined as the system under which a bank places its funds in risk-free assets with maturity periods matching its liability maturity profile so that there is no problem relating to asset liability mismatch and the quality of assets remains intact without leading to emergence of sub-standard assets. This extreme risk averseness has been also dubbed as “lazy banking” and “zombie banking”. Other such terms often referred to are: “class banking”, “mass banking”, “inclusive banking”, “logical banking”, “safe banking”, etc. What next? “Sitting-on-the-fence banking”—neither going this way nor that? “Water-on-the-duck’s-back banking”—no policy guidelines ever affect this sector? Perhaps it’s time for RBI to come out with an A to Z primer (arm-chair banking to zombie banking) to educate the layman about such interesting definitions.
JS Broca, New Delhi
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