Reading a newspaper’s editorial is an excellent way to update your awareness, augment your word power and to increase your reading speed. It is for this reason that we are bringing to you a list of difficult words/phrases used in the editorial of The Hindu. This editorial discusses “Dangerous suggestion: On allowing corporate houses to set up banks”. We have collated the words, their sense (as used in the editorial) and their general usage to help you in understanding the word better. There may be some words which you will be seeing for the first time. Make a note of those words in a notebook preferably or in your mind. Let’s have a look at the editorial now.
|Difficult Word/ Phrase||Contextual Meaning|
|Barely||only just; almost not|
|Evoke||bring or recall to the conscious mind|
|Harmonise||make consistent or compatible|
|In the throes of||in the middle of doing or dealing with something very difficult or painful|
|Unequivocal||leaving no doubt|
|Ring-fencing||enclose (a piece of land) with a ring fence|
|Rationale||a group of reasons for a decision or belief|
|Caveat||an explanation or warning that should be remembered when you are doing or thinking about something|
|Bailout||an act of giving financial assistance to a failing business or economy to save it from collapse|
|At the altar of||be sacrificed on the altar of something means to be destroyed by an activity, system, or belief that is bad but more important or more powerful|
Dangerous suggestion: On allowing corporate houses to set up banks
Industrial houses should not have access to household savings through their own banks
Most often, reports prepared by the RBI’s internal working groups barely (only just; almost not) draw much attention beyond the relevant circles in the banking and financial services industries and rarely ever evoke (bring or recall to the conscious mind) protest. But the strong reactions to an internal panel’s report on November 20, almost a full month since the group of central bank officials had submitted their recommendations on October 26, come as no surprise. The panel, which was tasked with reviewing ownership norms and corporate structure for private sector banks, has made worthwhile suggestions including ways to harmonise (make consistent or compatible) licensing norms for all banks including older legacy lenders and newer entrants. While the panel’s appointment in June — at a time when the country was in the throes of (in the middle of doing or dealing with something very difficult or painful) coping with the severe economic fallout of the COVID-19 lockdown — got little attention, its suggestion that corporate or industrial houses be allowed to promote banks has triggered widespread concern. And among those with reservations are at least three former senior central bankers and a global credit rating agency. Most intriguing is that the panel, which consulted with experts ranging from former RBI officials to legal and finance professionals, clearly acknowledges that all but one of these outside experts were unequivocal (leaving no doubt) in their opinion that given the prevailing far-from-ideal corporate governance culture, corporates ought to be barred from promoting banks.
The difficulty in ring-fencing (enclose (a piece of land) with a ring fence) “the non-financial activities of the promoters with that of the bank”, was flagged by these experts as the central concern, a fear that was echoed by S&P Global Ratings too. Former RBI Governor Raghuram Rajan and former Deputy Governor Viral Acharya — who was appointed by the Modi government after Mr. Rajan had left the central bank — in a joint article on LinkedIn have termed the proposal a ‘bad idea’ and questioned its rationale (a group of reasons for a decision or belief). Acknowledging the RBI group’s caveats (an explanation or warning that should be remembered when you are doing or thinking about something) including its assertion that corporates only be allowed as promoters after “necessary amendments to the Banking Regulation Act, 1949” are enacted to safeguard against connected lending, the two economists have, however, pointed to the bailouts (an act of giving financial assistance to a failing business or economy to save it from collapse) of Yes Bank and Lakshmi Vilas Bank as examples of the heightened risk posed by any move to loosen bank licensing norms. For all its regulatory powers and supervisory capabilities, the RBI failed to spot the build-up of troubled exposures at Yes Bank in time. The dangers posed to overall financial stability by letting industrial houses have access to relatively inexpensive capital in the form of household savings through banks, howsoever legally regulated, are far too great to risk at the altar of (be sacrificed on the altar of something means to be destroyed by an activity, system, or belief that is bad but more important or more powerful) liberalisation of ownership norms. The RBI’s decision makers need to reject this suggestion outright and place it where it belongs — the shelf.
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