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More capital and liquidity: towards what end? 

February 19, 2014
Dipankar Choudhury, LiveMint

Seldom do Reserve Bank of India (RBI) working papers attract as much attention as committee reports or discussion papers. That is partly due to working papers produced generally by academicians within the RBI fold, but more because committee reports and discussion papers have an element of fait accompli in them. They are supposed to be acted upon, with the tacit understanding that there will be minimal changes—one banker had quipped to this author that from the discussion papers to the final guidelines, RBI only corrects spelling mistakes.

But we will be doing a great disservice to each other if we let one recent working paper (Bhuyan and Srimany, January 2014) on NSFR (net stable funding ratio) pass without adequate debate. This is not the first paper of this nature, and has to be seen in conjunction with other literature (including from RBI) on the new banking regulation regime, defined by capital and liquidity, under the overall umbrella of Basel III.

Read more: Livemint

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