Why govt wants a unified gas allocation policy

It will eliminate several anomalies in the current guidelines and redraw the priority list

Among the tasks the Narendra Modi government has taken up is the complete overhaul of the policy framework for the allocation and utilisation of domestically-produced natural gas. The implications are huge and spread across multiple sectors including power, fertiliser, petrochemicals, transport and even atomic energy and space research.

The ministry of petroleum and natural gas last week moved a note detailing the changes for approval by the Cabinet Committee on Economic Affairs. The ministry has proposed to give top priority to those who sell compressed natural gas (CNG) for transport and piped natural gas (PNG) to households. Second in the new priority list are plants that provide inputs to atomic energy and space research. They are followed by hydrocarbons, including petrochemicals, urea plants and power plants, provided they sell the entire electricity at regulated tariff. At present, urea factories are on top of the pecking order, followed by liquefied petroleum gas (LPG) plants, power stations and city gas distributors who sellCNG and PNG.

CHANGING PRIORITIES

EXISTING LIST Urea manufacturing fertiliser plants LPG plants Power plants City gas distribution PROPOSED LIST City gas distribution Strategic sectors Petrochemical and LPG plants Urea plants Power plants

The new gas allocation policy would eliminate multiple anomalies and correct many imperfections in the current policy of allocation. Natural gas available in India is divided into two categories: domestic and imported. Imported gas is unregulated: marketers are free to purchase and sell it as they like. The challenge is with domestic gas. It falls under four distinct sets of rules: those under the administered price mechanism (APM), non-APM, pre-New Exploration Licensing Policy (NELP) and NELP. Each category of gas is allocated under different gas utilisation policies. Though the policies have almost similar order of priority, there are many ambiguities and anomalies, justifying the need for a uniform policy.

The new order
As a first step, the new government issued the new natural gas pricing guidelines on October 25, 2014, raising the price from the existing $4.2 per unit to $5.6 per unit for all categories. Two, under the current policy, APM gas is allocated to a few strategically important plants in preference to other sectors. However, the current utilisation policy for non-APM and NELP gas does not provide any such priority. The oil ministry has already received requests for allocation of small quantities of gas for plants supplying essential inputs to strategic sectors. Hence, the need to accord higher priority to atomic energy and space research.

There is ambiguity regarding extraction of higher fractions in the current utilisation policy. During its exploitation, natural gas is broken down into multiple fractions each of which is processed into a specific product. Higher fractions of gas emerge first during the production process and are wasted if not used. These fractions can be used only by petrochemical and LPG plants but they fall in the lower order of priority in the current policy. Since the higher fractions are of no use for sectors other than petrochemical and LPG, they cannot be utilised if the hydrocarbons are not extracted.

In the case of the fertiliser sector, an Empowered Group of Ministers (EGoM) had last year accorded highest priority to existing gas-based urea plants for allocation of NELP gas. However, in the non-APM gas utilisation policy, highest priority has been accorded to all gas-based fertiliser plants. Moreover, the EGoM decided to "maintain at 31.5 million standard cubic meters per day (mmscmd) the level of supplies of domestic gas to fertiliser sector". While agriculture expansion in the coming years would increase the demand for fertilisers, the 31.5 mmscmd cap would mean higher imports for the sector, leading to higher fertiliser subsidy.

Expansion of the city gas network through replacement of liquid fuels (diesel and LPG) by CNG andPNG is not viable on imported liquefied natural gas. But CNG and PNG are cleaner, safer, cheaper and more convenient than liquid fuels. Also, the replacement of liquid fuels by CNG and PNG will result in savings on foreign exchange through reduction in crude oil imports. Moreover, the Supreme Court in a 2002 judgment had directed the government to give priority to transport sector with regard to allocation of CNG.

Since gas supplies to CNG and PNG have lower priority under the current guidelines, a situation arose where some city gas distributors were receiving 100 per cent supplies, while others were receiving nil. This was challenged in the Gujarat High Court which ordered the allotment of gas to Ahmedabad at the same rate as Delhi and Mumbai. Cuts were imposed on supplies to non-priority sectors in order to implement this directive.

Finally, according to the APM gas policy, in case of reduction in availability of such gas, supplies to customers should be reduced on a pro-rate basis. In case of NELP gas, reverse priority cut order is applicable with reduction in supply of KG-D6 gas. The non-APM gas policy is altogether silent on the mechanism that would be adopted in case of reduction in supply. There is need for uniformity, which the new guidelines seek to bring in.

Step in the right direction
Experts say the new priority order and the overhaul of the gas utilisation policy appears to be a step in the right direction. "It makes sense because of multiple reasons," says India Ratings Director Salil Garg. "As no new urea plant is coming up right now, CNG and PNG must be promoted because they are cleaner fuels. PNG through the city gas route replaces LPG and thus does not carry the burden of subsidy. And the demand from strategically important sectors may not be huge but must be given priority." Garg adds that the power sector is suffering because of investment in new capacities without firm allocation and the decline in gas production from allocated sources, not because of its placement on the priority order.

Govt norms on e-marketing of farm produce soon

The proposed portals aim to eliminate the role of middlemen and unfair trade practices

The government will soon come out with guidelines to set up online agri-platforms, on the lines of Amazon and Jabong, to promote hassle-free sale of farm produce and thereby help farmers get good returns.

Already, some states like Karnataka, Andhra Pradesh andMaharashtra have set up such e-marketing platforms with their own funds on a small scale. The Centre wants to enhance it to countrywide level.

"We are in the process of finalising the guidelines to provide e-marketing trading option to farmers at APMC mandis," a senior Agriculture Ministry official told PTI.

The proposed e-marketing portals, to be set up with Rs 100 crore allocated under the 'Agri Infrastructure Fund' announced in the previous Budget, aims to eliminate the role of middlemen and unfair trade practices, the official said.

According to sources, the government initially plans to promote at least 600 mandis and provide an unified online trading option to farmers besides the existing traditional one at the Agricultural Produce Marketing Committees (APMCs).

Both small and big farmers can avail the option of either selling via online or through the traditional way in mandis.

The government is still discussing on list of commodities to be allowed for online trading, the likely name of the portal and roping in of e-marketing service provider and other private players.

Sources also said that Rs 20-35 lakh per mandi would be given to the state government to put in place necessary infrastructure like storage, grading, sorting and other facilities required for smooth functioning of online trading.

The entire transportation and godown facilities at agri e-marketing platform would be covered by the APMC Act unlike other online shopping portals like Jabong, Amazon or Flipkart, sources added.

The Karnataka government had last year launched Rashtriya e-Market Services (ReMS) in partnership with NCDEX Spot Exchange (NSPOT) in 47 major APMC markets. It is offering online trading in 4-5 commodities at present.

Is India prepared to tackle a Sony like cyber attack?

A national cyber crime and coordination centre meant to fend off such attacks is still awaiting approval

The recent data hack at Sony Pictures that has threatened a cyber war between the US and North Korea has raised questions about the preparedness of India if faced with a similar attack.

Experts are concerned that the country may not be adequately armed to counter such attacks against its corporations or the government. A National Cyber Coordination Centre (NCCC), which was planned to monitor traffic flowing through the country and possibly fend off such attacks, has been on the drawing board for a couple of years and is still awaiting approval.

India can only find solace in the fact that its Internet penetration is still one of the lowest in the world and digitisation by corporate and governments is still limited.

“In a way, the fact that we (India) are not completely digital, which could be looked at as one of the weak points from the business perspective, is working out to be one of the strongest points when seen from the cyber security point of view as it seals business from such attacks,” said Sanjay Deshpande, co-founder and chief executive officer, Uniken, a digital security firm.

The government’s digitisation push with the Digital India project will lead to an unprecedented spike in online transactions. This will require huge investments towards securing the country’s cyber perimeter. According to officials, the NCCC, which will cost the exchequer around Rs 800 crore and will take a year’s time to be operational, will watch Internet traffic flowing across the country without snooping on the content. It will help in mitigating or warding off domestic or international attacks by building trends and analytics on incoming or outgoing traffic.

However, the project is yet to be approved.

A senior official with National Technical Research Organisation (NTRO) told Business Standard the country might have all the relevant machinery and infrastructure in place to protect against cyber crimes, but such attacks usually occurred from the most remote or the least doubted points of entry. The agency claims to have detected around 30 attacks in the last four years. Set up in 2004, theNTRO is a technical intelligence agency under the National Security Adviser in the Prime Minister’s Office.

Earlier in December, hackers infiltrated into the servers of Sony Pictures to resist the release of a comedy film called The Interview, a movie depicting the assassination of North Korean leader Kim Jong-un. The film, along with other unreleased movies, were stolen and leaked online causing significant financial damage to Sony.

Following this, Sony cancelled The Interview’s widespread Christmas release to screen it in limited theatres and on the Internet later. Details of corporate finances and private emails between producers and Hollywood figures were also hacked and released on the Internet. This led to a war of words between the US and North Korea, where President Barack Obama promised to respond “proportionately” to the cyber-attack.

The US has reportedly also sought help from China to fight off attacks from North Korea, which relies heavily on Chinese electronic equipment.

North Korea had been on the US list of state sponsors of terrorism for two decades until the White House removed it in 2008 as part of now-stalled negotiations relating to Pyongyang’s nuclear programme.

“Cyber security needs to be looked at as a full chain. More holistic solutions need to be designed to protect business. Every aspect of the chain needs equal attention, starting from putting up the right infrastructure to running it appropriately through trained staff,” Sanjoy Sen, doctoral researcher in strategic governance at the UK-based Aston Business School said.

A Forrester report predicts that at least 60 per cent of brands will discover a breach of sensitive data in 2015. But while high-profile attacks such as those against Target, Home Depot and Sony in 2014 might be the most expensive and damaging of all time, they were not the norm, said the report. A third of all breaches occur as external attacks, but the most common source of a breach (46 per cent) is an internal incident that could involve malicious intent or an accident, or both.

“More than half of business and technology decision-makers rate lack of staff as a challenge, and 53 per cent find unavailability of security employees with the right skills as a major challenge,” Forrester’s Heidi Shey and Kelley Mak said in the report.

Although sectors like banking and financial services and also pharmaceuticals were beginning to invest more in cyber security given the sensitivity of the data they handled, India still had a lot of ground to cover, said officials.

PM against interference in PSBs, but supports political intervention

Modi said with public sector banks controlling 81% of branches and 77% of deposits, their net profit should improve from the current levels of 45%

Public sector bankers who often find themselves in a fix due to the dual regulation they face, that is, from the Reserve Bank of India (RBI) and the government which are often contradictory, will take heart from the statement made by none other than Prime Minister Narendra Modi and alsoFinance Minister Arun Jaitley.

"Banks would be run professionally, and there would be no interference. But accountability is essential… he (PM) is against political interference, but supports political intervention in the interest of the people," said a finance ministry statement.

The statements come in the backdrop of recommendations of the P J Nayak committee, a high-level panel appointed byRBI to improve corporate governance in banks.

The panel had recommended that the government should give up its control in public sector banks and cut its stakes below 51 per cent. It has also observed that dual regulation due to government's interference has crippled the functioning of these banks.

Modi said with public sector banks controlling 81 per cent of branches and 77 per cent of deposits, their net profit should improve from the current levels of 45 per cent.

To improve the functioning of state-run lenders, the PM has recommended that there should be common strengths in areas such as advertising and software that can be built upon.

Modi also asked banks to prioritise on loans to students. With non-performing assets rising in the education sector, banks have been cautious on lending to the education sector.

The PM also called for an end to lazy banking and said the parameters for success should be redefined. For instance, let them prioritise loans to enterprises, which will generate more employment," said the finance ministry release, quoting the prime minister.

Going ahead, the PM has also asked banks to set goals for the 75th Independence Day in 2022, adding that with the government's agenda of providing housing for all by 2022, this is an opportunity that banks should play on with 11 crore more houses required in the country.

Earlier in the day, finance minister Arun Jaitley said, "There are a series of steps that the government has taken and there is a need now for the banking system in India in a big way to finance infrastructure, infuse liquidity."

Slow demand in the corporate sector is one of the key reasons that had led to tepid credit offtake. As per RBI data, as of December 12, credit grew 10.8 per cent year-on-year, compared with 14.9 per cent during the corresponding period last year. This was the worst credit growth since 1997. The credit growth was only 5.2 per cent in the current financial year. (April-December).

Jaitley also expressed concerns over the high level of NPAs and said the levels were "unacceptable" in some cases. He also added that there was a need to get better talent into the system.

Separately, Jayant Sinha, the minister of state for finance, said he expected credit offtake to improve, as the economy improves and the interest rates come down.

"Credit offtake depends on multiple factors; it has to do with economy, interest rates, consumer demand. There is also an overhang off NPAs, which has been higher in the public sector than private sector. So, as the economy improves, the interest rates come down, which will certainly happen in the next few months. I am very hopeful and sure that credit offtake will improve."

After hiking interest rate thrice between September 2013 and January 2014, the central bank has maintained status quo since then, amid slowing economic growth. Many experts believe that interest rates should have come down to spur growth, as inflation has softened.

Retail inflation slowed to 4.5 per cent in November, the slowest rate recorded since the data series was first published in 2012.

On Friday, a finance ministry official had said the government could consider candidates from private sector to head large PSBs, if such recommendations were made by the search committee.

On the issue of fiscal consolidation, Sinha said the government is committed to fiscal consolidation and is confident about the road map and the target for achieving it.

"The numbers can always be achieved, and it was done so in the past through various mechanisms which I don't think anyone of us was comfortable with. It is really the quality of the numbers that is important," he said.

According to data released in December, the fiscal deficit during April-November was 98.9 per cent of the 2014-15 Budget Estimate.

Sinha also said it is important to ensure that the economy is set on a higher growth trajectory of 7-8 per cent, but it needs to be both sustainable and non-inflationary.

Panagariya to be NITI Aayog's vice-chairman

The vice-chairman would be of Cabinet rank; PM to head Aayog, which will also have full-time and part-time members

Renowned pro-growth economist Arvind Panagariya will be the first vice-chairman of the newly announced NITI Aayog, which has replaced the Planning Commission, a government source told Business Standard. An official announcement to this effect would be made next week. The vice-chairman would be of Cabinet rank.

The new body — the National Institution for Transforming India (NITI) Aayog — will be headed by the prime minister, and comprise a vice-chairperson, besides full-time and part-time members.

The Aayog will have a governing council, comprising all chief ministers and lieutenant governors, and will work towards fostering co-operative federalism for providing a national agenda to the Centre and states.

Panagariya, mentored by trade economist Jagdish Bhagwati, is one of the main brains behind the recent labour reforms in Rajasthan. He was vice-chairman of Rajasthan chief minister’s economic advisory council.

Jagdish Bhagwati, professor of Indian political economy at Columbia University, is a pro-reform economist and ran a lively debate with Nobel Laureate Amartya Sen on the issue of redistribution of wealth and economic growth.

Panagariya, a columnist in Business Standard, along with Bhagwati had argued that economic growth should be given priority, as without it, social goals are difficult to meet.

Panagariya was also the chief economist at Asian Development Bank. He holds a PhD degree in economics from Princeton University. He is also an editor of the India Policy Forum, a journal modelled on the Brookings Papers on Economic Activity and jointly published by the Brookings Institution, Washington, DC, and the National Council on Applied Economic Research, New Delhi.

His technical papers have been printed in the American Economic Review, Quarterly Journal of Economics, Review of Economic Studies, Journal of International Economics, and International Economic Review. Besides, his policy papers have appeared in the Foreign Affairs, Foreign Policy, World Economy, Journal of International Affairs and Finance and Development.

Learning lacunae

A report in the formation of a task force by HRD Ministry to formulate a national education policy, based on the feedback from villages and blocks, points to the government’s indifference towards educational reform. President Pranab Mukherjee, in his 65th Republic Day address, described corruption as a form of “cancer that is eroding democracy and weakening the foundation of the State.” Such malady as rampant corruption, violence, terrorism, social vices and unrest has brought the country’s culture, tradition and peace to the brink of damnation. Incidentally, mankind has a deeper dimension beyond the body and the brain. The mere enactment of laws and the creation of vigilance entities as the Lokpal are not sufficient as correctives to address such maladies.

To understand the reasons behind the present mindset of the masses, it is necessary to recall Lord Macanlay’s address in the British Parliament in February 1835 ~ “I have travelled across the length and breadth of India and have not seen one person who is a beggar, who is a thief. Such moral values, people of such calibre that I do not think we would even conquer this country, unless we break the backbone of this nation, which is her spiritual and cultural heritage and therefore, I propose that we replace her old and ancient education system, her culture. For if the Indians think that all that is foreign and English is good and greater than their own, they will lose self-esteem, their native culture and they will become what we want them, a truly dominated nation.”

Thus it was that in the scheme of education under the British, India’s traditional moral lessons in matters religious were virtually jettisoned. The contemporary worthies, with myopic vision, hailed the new education system, believing that moral principles and values had outlived their utility in the era of scientific renaissance.

Swami Vivekananda had grasped the baneful effects of the absence of proper coordination and harmony among the various faculties of body, brain and mind in the British system of education. He had pointed out unambiguously that religious lessons, preaching moral principles were the life of Indians that form their character and when removed, the country will die under the weight of immorality in spite of social reforms, scientific advancement and material gains. He stressed the need for adequate facilities to stimulate the spiritual instincts of boys and girls in the new materialistic education. This was reaffirmed by Mahatma Gandhi who maintained that unless the body, brain and mind went hand in hand with the in-parallel awakening of the soul; all materialistic development would be lopsided.

The continuation of the legacy of “raj education” in independent India has heightened desires, multiplied wants, miseries, clashes, conflicts. In the net, the soul of society has been destroyed. The supreme edifice of philosophical thoughts has been pulled down to the level of sordid utilitarianism. This has undermined the process, the very foundation of their cultural life. It has dislodged people’s love for their language and literature, their appreciation of the arts and worst of all, their faith in traditions and religions. The malignant maladies are the crude manifestations of Vivekananda’s foreboding.

India continues to make do with deficient colonial education in schools, the main platform for mass education. The country has been ranked 126th out of 175 in the 2006 Human Development Report. “The education,” said Vivekananda, “which does not help the common masses of people to equip themselves for the struggle of life, which does not bring out their strength of character, spirit of self-sacrifice and philanthropy and the courage of a lion, is as worthless as a Dead Sea apple.” He described real education as the one which enables one to stand on one’s legs, helps him to manifest the perfection already in him. It has to be a creative force in life and must be based on religion to seek fulfillment through the service of humanity in a spirit of worship. He emphasised a scheme of education that includes imparting scientific knowledge and rendering moral lessons to hold up the Indian religious spirit, meet the national temperament and balance the national character. He stressed that a healthy social order can never be built without a strong moral character of the masses. “Education”, according to Vivekananda, is “a training by which expressions of will are brought under control and become fruitful.”

There is no time for more pious platitudes with regard to educational reform. Urgent steps are necessary for the incorporation of Vivekananda’s ideals in the school curriculum, indeed to rectify and reform mass education. The recovery of traditional knowledge from religious scripts in depth and fullness, its reinstatement in forms adapted to the present needs and practical applications of the knowledge, so gathered, to the development of a healthy economic life and a new social order must constitute the guiding principle of the system of education that is to be evolved and given to the masses for their well-being.

The committee on Religious and Moral Instruction that was previously set up by the Union education ministry had recommended that “the cure of growing maladies and ills of the society lies in deliberate inculcation of moral and spiritual values from the earliest years of lives.” Human faculties and character are in a formative stage right from the time one is a toddler up to the teenage level.

If mass education has to be geared for cultural emancipation, school education should be reformed, specifically to include moral science subjects that will implant in the plastic minds of young boys and girls spiritual and virtuous instincts and develop in them a strong moral character. They should be taught to imbibe a set of virtues and values like truthfulness, honesty, integrity, love, respect, faith, to tolerance, gratitude, devotion, piety, forgiveness, modesty, fellow-feeling, selflessness, services to others etc. by inculcating the uplifting gospels that have been recorded in the ancient scriptures. Provision of weightage on proficiency certificate, pertaining to moral science subjects in future placements in life, might be a way to awaken their parents to the need to accord importance to moral and value education. This will help build up a healthy united society with a strong ethical foundation. Incidentally, in the roadmap unveiled by the President last June, education is a conspicuous exclusion. It appears that the BJP, a party based on faith and culture, is not anxious to change the legacy of materialistic colonial education which is at the core of the present social maladies. Until school education, the main platform of mass education, is reformed to make it ‘man-making’ based on the ideals of Swami Vivekananda, the Prime Minister’s dream of a rising India, embellished with pristine glory, cannot be realised.

GYAN SANGAM

Present Government has taken Number of Bold Steps like Introduction of Constitution Amendment Bill on Goods and Services Tax (GST), Amendment of Land Acquisition Act to Revive Infrastructure Growth:FM

The Union Finance Minister Shri Arun Jaitley said that the present Government has taken number of bold steps like Goods and services Tax (GST). He said that the new Land Acquisition act that was passed by the previous regime had stalled development. He said that the present Government has taken necessary steps to change this Act so as to revive infrastructure growth. The Union Finance Minister Shri Arun Jaitley said that risks have to be taken. He said that the positives are that there is an element of decisiveness in the new government and there is large popular support for that. We have taken steps to increase both FDI and the domestic investment to give the big push to manufacturing sector. Excise duties collection was diverted towards to highway Projects to meet their financing requirement. Banks have a major role to play in the financing of infrastructure. Growth in power and other infrastructure sectors needs to be revived. The Finance Minister Shri Jaitley was speaking at the two day “Retreat for Banks and Financial Institutions” called “ज्ञानसंगम” “Gyan Sangam” at National Institute of Banking Management (NIBM), Pune, Maharashtra which was graced by the Prime Minister Shri Narendra Modi. Shri Jayant Sinha, Minister of State for Finance, Dr. Raghuram Rajan, Governor, Reserve Bank of India, Shri Rajiv Mehrishi, Finance Secretary, Dr. Hasmukh Adhia, Secretary, Department of Financial Services (DFS) and Dr. Arvind Subramanian, Chief Economic Adviser, Regulators, Officers of the Ministry of Finance, top management of all Public Sector Banks (PSBs), Insurance Companies and Financial Institutions (FIs) also attended among others. The Finance Minister Shri Jaitley further stated that this was a gathering of important people in the banking industry who have assembled at a crucial stage of our economy. The actual situation is that we are trying to bring about transformation in the Indian economy. In the past the rights were being conferred on people one after the other for which we did not have the resources. The result was a slowdown. Risks have to be taken. The positives are that there is an element of decisiveness in the new government and there is large popular support for that. We have taken steps to increase both FDI and the domestic investment to give the big push to manufacturing sector. Excise duties collection was diverted towards to highway Projects to meet their financing requirement. Banks have a major role to play in the financing of infrastructure. Growth in power and other infrastructure sectors needs to be revived. The Finance Minister Shri Jaitley stated that both the Prime Minister and he would like to be acquainted about the challenges faced by the PSBs. They would like to know the answers to the questions as to how to get out of the stress created by NPAs and how credit growth can pick up. Government is willing to reconsider the rules. Government is open to bold decisions for professionalization of the management and autonomy in decision making, rewarding merit, and relooking at the recruitment process at the top management level of PSBs.  The government was ready to protect commercial decisions so as to avoid the delay in good decisions.  The Finance Minister Shri Jaitley that Financial Inclusion through PMJDY was taken up in a mission mode. Most of the inactive accounts will become operational with the introduction of Direct Benefit Transfer (DBT).These account holders will become symbol of the identity of the cashless system.              In the forenoon Session, Dr. Hasmukh Adhia welcomed the Finance Minister Shri Arun Jaitley and apprised him of the proceedings of the retreat so far. He informed that the discussion groups have been asked to suggest the important action points for the short term (0 to 12 months) and medium term (13 to 36 months) separately for banks and policy makers. These six groups would then be combined into 3 presentations by the CMDs before the prime Minister. Earlier Chief Economic Advisor Dr. Arvind Subramanian suggested ways by which the banking system can generate and efficiently allocate domestic savings to sustain the investment rate of 35% of GDP to achieve the growth of 8% in medium term. He proposed that the PSBs should be differentiated into weak, good and strong categories and accordingly consolidation and restructuring measures could be applied to them. There should be diversification both within and outside the banking system. There should be better bankruptcy procedures. The current overhang of stressed assets should be resolved by distribution of the pain between promoters, creditors and tax payers. Shri Rajiv Mehrishi, Finance Secretary raised the question whether bank nationalisation has been able to achieve the objectives of reaching out to all people and expansion of credit as necessary. He urged that banks need to be healthy to drive 7-8% growth in GDP. Additionally to provide that magnitude of financing, the PSBs need to enhance their capital base. Non-Banking payment solutions like Mobile Banking could be used to reach out to poor people. This may help cashless transactions and thus reduce black money in the system. Government may take a relook at the legal system to deal with wilful defaulters. Dr. Raghuram Rajan, Governor Reserve Bank of India, stated that banks need to channelize the full savings of the households into the financial system so that requisite financial resources for growth could be made available. He also stated that there is a need for internationalisation of the banking system in the current global environment. In the short term (from 0 to 12 months), he said that there was need to clean up the NPAs and then restructure other stressed loans so as to put the economy back on the track.   The Capital base of the banks may need to be enhanced. He emphasised for the need for consolidation in ownership, improvement in governance, and enhancement of management capability. He stated that with the licensing of the small banks and the payment banks there would be new players in the industry. The competition amongst the PSBs will also grow to meet these challenges. Accordingly, PSBs have to develop differentiated products.  The PSBs need to recruit young talent, train, and retain them. And that the Govt. needs to have a re-look at the campus recruitment which at present is banned because of Supreme Court ruling. Further, he advised that the bona fide mistakes made by the bankers while taking commercial decisions should be protected by the Govt. If the officers are hauled up for such decisions this would to lead to delay in good decisions because of avoidance of risk. Earliar, the morning session started with a talk by Swami Sukhabodhanandji on “Leadership and Change Management”. Thereafter, the groups made presentations about their discussions, findings and recommendations. There was a talk on financial architecture of MSME by Shri K.V. Kamath, who also headed a committee on the same subject.