RBI, Reddy and Indian economy...

1) RBI Governor, Y V Reddy, is a big liability for Indian economy and needs to be removed from the scene. Sooner the better.

He is unimaginative, unintelligent, reactive, impulsive and extremely bad adviser to the Government of India, especially FM P Chidambaram and PM Manmohan Singh, and never has pro-active approach to any problem. He does not have ability to foresaw the events or troubles, and deals with it on "reactive basis"

He wrongly advised all these years to weaken the Rupee (to boost the exports - sic)

He deliberately encouraged "artificial intervention" in a free economy to "sterilize the rise of a rupee"

He advised PM and FM to go strong against FII inflow, and in company with SEBI's Damodaran, actively promoted the P-Note issue that finally drove down the FII from India. He was standing with "EXIT" board at Sahar International Airport, Mumbai to wish good bye to FII.

Due to his stubborn, ill fated and illogical actions, borne out of his limited knowledge of finance, and lack of ability to judge the world events, like troubles in banking centers in USA having cascading effect on Indian outfits and Crude oil shocks, the Indian inflation rose to the highest level of 11%.

Until such time, he was beating the popular drum of India's growth story in which he was the least participant.

He murdered thousands of investors in Global Trust Bank by letting it die and handed over to Oriental Bank of Commerce on a golden plate at ZERO cost, in spite of the fact that there were high quality buyers like Newbridge capital, Sinsui Bank etc who were prepared to pay as much as Rs 1500 crores in equity and more in debt.

The only reason that he killed the GTB deal was that he did not like or even hated to extreme, Ramesh Gelli, founder and Chairman of GTB and ex-founder of highly successful Vysya Bank, who was from Andhra - same state of Mr. Y V Reddy. It was not a battle of right and wrong but one Andhrite not liking another Andhrite.

While GTB was still alive under RBI scheme, with 12 years of gestation period to reward the GTB investors with distribution later, he provocatively asked SEBI to write off the GTB shares from DEMAT accounts, so that no one claims anything after 12 years. He cheated out the GTB investors in perhaps biggest fraud on investors in India.

Such persons are "parasite" on Indian economy. Sooner they are removed from the scene, even if you have to pay him millions dollar to get him out, it is worth it. He is a sucker and will continue to damage Indian economy so long as he is at the helm of RBI


Kalidas, Hong Kong
26-06-2008 (Ref: 09/063)

2)
for ravindra321

you did a good job in reproducing the article describing Reddy's overblown credentialsm hopes and expectation. Those who are inefficient land up the job in IMF or World Bank which is a zoo of unwanted animals.

My article described credibility of the same person. I relied more on his deeds and kartoots. We all know what happened to Global Trust Bank and this MMB is full of messages where irate investors are asking what happened to their shares, which no longer exist even on books at the instance of SEBI, who acted under RBI (or Reddy's) directive, in spite of the fact that GTB still had a life of 12 years from the date of its sale.

Reddy rufused to accept the offer of Newbridge Capital (NBC) for about 1500 crores infusion or about Rs 125 per share. Obviously, NBC did not consider the GTB asset value as zero. Had this offer been accepted, the stock of GTB would have risen to over Rs 300

Most of the bad assets of GTB were in the form of shares during Ketan Market episode. The market since then rose nearly 400%, which would have made the share value nearly 5 to 10 times. Oriental Bank of Commerce in very first year of taking control, reportedly realized Rs 900 crores of almost Rs 75 per share. That means that the good assets were deliberately blown off as 'bad assets' otherwise there could not have been that much recovery.

And the question is - where those Rs 900 crores gone? They rightfully belonged to GTB shareholders. When the losses were written off, P/L was debited; so when they were realized, they should have been written back to P/L of GTB and paid to its shareholders.

However, it appears that entire Rs 900 crores were credited to the accounts of Oriental Bank of Commerce, instead of GTB. All shares outstandings were obviously transferred to OBC, whereas they belonged to other private shareholders like you and me.

All officials like RBI, Reddy, SEBI, Damodaran, OBC Chairman Narang, Statutory Auditors of IBC and GTB were involved in this massive cover up and ate away thousands of crores at today's market value.

This is why I rate GTB/OBC affairs as the worst Financial Scandal of Indian stock market, 10 times higher than Harshad Mehta and Ketan Parekh. There should be full parliamentary enquiry, CBI investigation and audit by Auditors Comptrollers of India to ferret out the truth and compensate all bonafide shareholders of GTB

Who says that India is in democracy where judicial system is equitable. It favors only those in power. What the hell BSE and NSE are doing. They are supposed to protect the interests of all investors. All listing conditions, statutory requirements of liquidation under Companies Act and Banking Regulation Act were thrown out of window. India is still a myth and the reality is that it is perhaps most corrupt place in the world.

Kalidas, Hong Kong
26-05-2008

3)

for ravindra321

It is not as difficult as to find a real pace bowler out of 110 crores of population. There is a saying in Hinduism - ' You get even God if you really search for him truthfully with full efforts'

We are talking about searching a human. Are we to believe that Indian DNA is so bad that we can not find even a single person to head RBI in spite of having so many business schools like IIM, Bajaj Institute, Administrative Staff College in Hyderabad etc etc?

The only disqualification should be IAS - they are the ones who are creating chaos in the country with their old school of thoughts and pedestrian approach. We need real pro active Executives not glorified 'babus' from all over the India.

Kalidas, Hong Kong
26-05-2008

4)

for XD

I am not in a position to reply individually - almost impossible. My views on IFCI were well known and I also gave SELL call for all equity in early January and also a couple of months back, when almost everyone got jolted.

We are no longer in bull market. We are in bear hug and grip is tightening. All stocks will go down as fears of acute recession in USA is taking a firm hold. Banks are in serious trouble, and the first sector that investors avoid today is finance sector.

IFCI is unfortunately a 'Finance stock'. It had the best days which were not capitalized by the Government. It is not going to be affected as much as others, but when the market goes down, everything drops.

Buy some at Rs 39.85 and more between Rs 31 to 33. The lowest point I foresee is Rs 29 at the moment.

Kalidas, Hong Kong
27-06-2008

5)
My views are well known - you should read all which contain most of the answers to your query.

To be brief - yes, the market will go down severely - may test 9200 minimum. I mentioned this almost in December and gave the SELL call in last week to sell at least 70% before 16/Jan/2008 - SENSEX plunged over 3000 points with no buyers on hundreds of counters.

That scenario will be repeated again, sooner than later, and this time around, the force will be more severe in January. What you see today is 'slow poisoning' of the market, without patient knowing that he is dying.

Kalidas, Hong Kong
27-06-2008

6)

I follow the events broadly and do not follow them in 'micro manner' because we may not know news on minute to minute basis as you do.

Bull run in Indian market is now at least year away. It may go down severely, regardless of nuclear deal due to global crisis. lack of Nuclear deal will make the correction 'market specific'

India is in the middle of severe market contraction. Another 30% fall is in card, if present global scenario is the guide. On its own, India's fundamentals have been severely dented.

India Growth Story no longer holds good. When overseas markets contract severely, the money will flow out there when the market will begin to recover.

Only domestic money can save the Indian market. However, what I find is that most of Indian investors are in F&O Segement - out of Rs 77000 crores turnover, only 17000 crores are in cash segment. Rest is speculation.

Indian growth rate will come down to less than 5%, may be below 4%. Unless the market corrects very severely, I am not so keen to re-invest into India. As non Resident, we have other markets too at out disposal. Our views may not be in sync with local investors like you.

Kalidas, Hong Kong
27-06-2008

7)

for jinal,

Firstly, I am not playing to the gallery to please everybody, whether they are my fan or not. I never write having what kind of audience I get. I just present my views which may be accepted or ignored.

Right you are that Reddy could not have predicted sub prime crisis. However, it is his job, as Governor of RBI, to have very good knowledge of global market, especially the banking crisis, which is one of his field. India is now relatively free economy, and a global participant. He is expected to know the developing stage of crisis which is in fact unfolding since the August 2007 - he was busy driving out FII to weaken the rupee by controlling the demand.

He is the Governor of RBI - not a subservient slave of Government of India. The change in Government does not cost him his job - he will still be there. He has to follow the policy of independence for which RBI was created at first place. If everything is in control of Finance Ministry or Government, we do not need RBI

Most of the government actions come in after receiving the advice from the concerned bureaucrat. He is a key adviser to the GOI, and he has to tell them specifically what is right or wrong for the country on exchange front, be it to the liking of GOI or not. He did not do his job.

If he has to follow what his bosses in Ministry tell him to do, then we do not need IAS officers to man the top financial institution like RBI. Highest post invite highest level of responsibility and accountability. If you think that it is not so, you are living in the bullock cart age.

You were silent for his role in the collapse of Global Trust Bank where he deceived all investors by his crooked belief. He also drove out the FII for which he gave the advice to the GOI, and this is why SEBI came into picture with P-Note.

He was in charge of money - he should have known how the money flows from one place to another. Money is like water in a flowing river. If dam is to be built on, the concerned Engineer works out everything - how much water the dam can hold, what should be the height, what is the critical points in the event of flood etc.

He as Governor knew of FII flow or flooding of foreign money. Even you would not have come to the stock market if you knew that it was not going to rise. Does it mean that you are a speculator, and should be restrained or driven out not to let rupee rise.

And what the hell he did. If he had allowed the Rupee to rise, the ill effect of oil prices would have been less - but no - he was goddamn fool in building the barriers when the foreigners were flooding with cash to let India grow further and faster. He was instrumental in killing the momentum. And you must know that stock market or capital market thrives to the maximum when the momentum gains.

When China with almost 100 billions of inflow every year for over 12 years did not impose such barrier, why did RBI set up barriers when only $15 billions stuck the Indian store? If China with 1.3 billion population could manage it, why India with 1.1 billion population could not manage it under his leadership?

He also advised the government to allow Indian corporates to invest overseas, just to dilute the pressure on rupee. When the entire world wanted to invest in India, why did he want to advise GOI to increase the investment of Indian corporates overseas especially when the markets the world over in critical shape? Just to weaken the rupee?

He also allowed Indian residents to send out as much as $ 100,000 abroad for any purpose just to reduce the pressure on rupee.

China never said No to foreign investments for 13th year in a row nor permitted its Companies to invest into overseas market just to avoid adverse effect on its Yuan exchange rate. that too, after almost 1. 5 trillions having entered China, and India got tired with just $ 15 Billions?

Kalidas, Hong Kong
27-06-2008

8)

for victorjunior,

You have to be stock specific. Where you find that pace of fall has slowed down put them on your radar.

No need to put fresh money now; but if I were you, I would do the following:
- examine the stock you believe are good in your opinion and select them.
- in your portfolio, see which stock loses the most and the one which loses the least.
- sell the stock with least loss and buy the one with maximum loss. Yes, you are taking loss, but you are buying the stock with even more losses, so it averages down.
- sell high value stocks and buy relatively low value stock, provided the value is not below Rs 20. for instance, if you are losing more in stock A with Rs 200 CMP (losing say Rs 40 or 20%), buy the stock B in your portfolio having value say Rs 40 (against purchase of price, say Rs 80 or 50%). By selling 1 share of A will get you 5 shares of B and at the same time you are averaging down the stock B without fresh money.

What you are doing is the capital raised from 20% losing position is transferred to 50% losing position, without using extra funds. Do not bother much even if the stock B goes down further. Had you invested fresh money in B, you would have felt more pinch than above strategy.

Do not send my your stock list - make your own decision. And do not go on reminding me that you have put in money reserved for your child's education. In stock market you are taking risk. The market does not think whether it is your money or your wife's money or parent's PF or your Child'e education money.

So be practical. No one wants to lose money in stock market - but it does not happen that way.

Good stocks always make money. This is universal idiom. The situation globally is so bad, that even I am thinking again to reenter the market in spite of provocation to put in at least 15% of my 100% cash money.

Kalidas, Hong Kong
27-06-2008


9)

for Guest CJ
You are caught in the mousetrap. Keep open mind and get out of anti-rhetoric and phobia. Every currency faces a problem due to excesses at one time or other - but the nation lives on, so also the currency. You are falling to rhetoric that Indian corporates were using P-Notes to whitewash the black money - those days are almost gone. There are hundreds of ways within India itself to whitewash the black money at cheapest cost.

At one time, Russian Rouble was considered the worst currency to own, and its bond prices went down 80%, currency dropped 400% and interest rate on Government bonds rose as high as 45% - today everything reversed. The oil and commodity boom saved the Russia.

Kalidas, Hong Kong
28-06-2008