Since 1968, when he left the RBI, the RBI has been the bete noire of Deena Khatkhate in an almost obsessive manner. In his Gadflight column, Business Standard, May 13, 1997, Platonic bastion or Potemkin village, he has once again attacked the RBI. Around the same time in an article on Net Inter-bank Liabilities: Needless Sound and Fury in the EPW, May 10, 1997, Deena Khatkhate has come out with shining armour to the defence of the RBI! His defence of the RBI policy action on inter-bank liabilities (IBL) is indeed touching. But this time round he has focussed his concentrated wrath on the present columnist when he says:
A former deputy governor of the RBI piqued by the demolition of the architecture of credit policy he had so assiduously built during his tenure has expressed foreboding of an impending apocalypse.
He goes on to say: The deputy governor has allowed his heart to ache rather than his head to think when he calls an occurrence of any bank holding inter-bank assets more than its liabilities to other banks a quirk. Quirk is an expression that is used for an accidental phenomenon which under normal circumstances does not occur. But any bank with excess of inter-bank liabilities over inter-bank assets must be accompanied by some other bank or banks with inter-bank assets exceeding inter-bank liabilities.
While venting his spleen at the present columnist, ostensibly on the abstruse subject of reserve requirements on IBL the provocation of such a personalised attack must clearly be caused by some other fundamental ailment. The choice of the EPW rather than the Gadflight column where Deena Khatkhate could reach out more effectively with his stultifying comments is somewhat baffling. Surely Deena Khatkhate knows only too well that the Business Standard allows free and open debate columnists take stands diametrically opposite to editorials and vice versa and columnists debate issues witness Pradeep Rajes Paradise revisited (Business Standard, April 29, 1997) in response to my column `Forgive them OLord (Business Standard, April 25, 1997). While Pradeep Raje and I totally disagree, neither has reason to take offence. I am convinced that Deena Khatkhate is too powerful a writer to be concerned about my response, so the shifting of the battleground to the EPW remains a mystery. Surely, readers of the
Business Standard are far more savvy about IBL than readers of the EPW. What then led Deena Khatkhate to chose the EPW for his personalised diatribe? I wonder whether Deena Khatkhate would know that the columns of the EPW are not available to me because of my prior commitment to the Business Standard. But what of the EPW traditions? Would a Sachin Chaudhary or a Ravi Hazari have allowed such personalised attacks?
One has to be true to ones salt and face the wrath of Deena Khatkhate by unequivocally telling him that he has crossed all bounds of decorum and that intemperate and personalised attacks are not his exclusive privilege.
I would never believe that I am the architect of credit policy; from years of experience one knows that one is merely a cog in the wheel even if one were an important cog. Deena Khatkhate needs to understand a bit of Gestaltian psychology that the whole is more than the sum of the parts and as such institutions are for more important than individuals.
Again, while Deena Khatkhate may be an international wizard on monetary economics, it does not enable him to unravel the intricacies of IBL in India. Deena Khatkhate claims that it is not proper to argue that inter-bank assets exceeding inter-bank liabilities is a `quirk. In fact, this is not a matter of analytics but of facts. But Deena Khatkhate is not supposed to know the peculiar structure in India with different regulatory regimes for regional rural banks, state co-operative banks and urban co-operative banks. Nor can we expect Deena Khatkhate to understand the treatment of primary dealers in terms of inter-bank liabilities/assets. If only if we grant this lack of detailed knowledge of the system that we can say that Deena Khatkhate is right about the `quirk. But let me explain that net inter-bank assets is a relatively rare phenomenon among the 99 commercial banks and the Deena Khatkhate hypothesis holds only in a wider concept of banks including RRBs and co-operative banks. Given the vastly
different systems of reserve requirements one necessarily has to take this into account. It is well-known that RRBs and co-operatives place large deposits with the commercial banks, and the `quirk relates to the commercial banks and not the system as a whole
Deena Khatkhate is totally wrong to argue that RBI subsequently advised about the statutory CRR of 3 per cent. This has been reiterated by RBI on a number of occasions. P.S. Srikant (Economic Times, May 16, 1997) has conclusively shown that of the 99 banks, the 3 per cent statutory cash reserve ratio on IBL impacts on only three banks and to the extent of Rs. 20 crore.
To Deena Khatkhate, everything that the RBI does is not good enough. For Deena Khatkhate, the RBI is the perrenial fall guy,and if for one fleeting moment, a retired deputy governor could divert Deena Khatkhates ire away from the RBI, the sacrifice would not be in vain.
If Deena Khatkhate were a Japanese, he would need to give a public apology but since he is not, that would not be his style, he would in all probabilities call for a choice of weapons.
I can only repeat what Dr. Manmohan Singh once quoted when he was under attack:
Sarfaroshi ki tamanna ab hamare dil mein hain,
Dekhna hai zor kitna bazoo-e-qatil mein hain.
(I now have a desire to lay down my life. Let us see how much strength lies in the arms of the assassin).
With this, I end my private and public debate with Deena Khatkhate.
