Interview Preparation for RBI Grade B 2019 – Interview 17

Interview Preparation for RBI Grade B 2019 – Interview 17


SAKSHI YOU ARE ALREADY WORKING IN QCI AND
I BELIEVE DOING PRETTY WELL THERE,SO WHY DO YOU WANT TO MAKE THIS MOVE AGAIN AND LEAVE
THE ORGANISATION WHICH HAS GIVEN YOU THE OPPORTUNITY TO YOU KNOW WORK AND HAVE A STABLE LIFE ?
SIR ,I HAVE’NT I LEFT QCI SOMETIME BACK I AM NO MORE WORKING WITH THEM AND I WAS INFACT
WORKING IN THE US WITH A COMPANY CALLED AS ….. AND IT WAS A VERY CONSCIOUS DECISION
FOR ME TO LEAVE THAT JOB AND COME BACK TO INDIA BECAUSE I REALLY WANTED TO CONTRIBUTE
TO THE PUBLIC POLICY FORMULATION WITHIN INDIA HENCE SINCE 2014 I HAVE BEEN GIVING VARIOUS
GOVERNMENT EXAMS INCLUDING THE EXAM OF RESERVE BANK OF INDIA AND IN LINE WITH MY ECONOMICS
BACKGROUND SO A JOB AT RESERVE BANK OF INDIA IS REALLY INLINE WITH MY INTEREST AREAS AND
THE CAREER OPPORTUNITY THAT RESERVE BANK OFFERS FOR YOUR CAREER GROWTH ARE QUITE SOMETHING
WHICH HAS ATTRACTED TO ME FOR EXAMPLE LIKE THROUGH THE RESERVE BANK OF INDIA THERE ARE
ALSO OPPORTUNITIES TO EXPLORE OUTSIDE OF INDIA OPPORTUNITIES FOR HIGHER EDUCATION SO THESE
ARE AREAS WHICH ARE OF INTEREST TO ME TO WORK WITH THE RESERVE BANK. BUT WHAT WAS WRONG WITH QCI THAT YOU DECIDED
TO LEAVE THE ORGANISATION.? SIR THERE WAS NOTHING WRONG WITH QCI AND THAT
EXPERIENCE WAS QUITE ENRICHING FOR ME HOW EVER THAT ROLE WAS A TEMPORARY ROLE THAT I
HAD TAKEN IN THE MIDDLE SO THAT I COULD JUST KEEP GAINING SOME PROFESSIONAL EXPERIENCE
AND I HAD ACTUALLY SUFFERED FROM SOME BACK INJURY BECAUSE OF WHICH I HAD TO TAKE BED
REST FOR ONE YEAR BECAUSE OF WHICH I HAD TO QUIT THE ORGANISATION. OK. CAG HAS RECENTLY COME OUT WITH A REPORT SAYING
THAT THE OFF BALANCING SHEET FINANCING BY THE CENTRAL GOVERNMENT HAS INCREASED IN THE
NEAR PAST SO CAN YOU THROW SOME LIGHT ON WHAT IS OFF BALANCE SHEET FINANCING AND WHAT IS
HAPPENING ? YES SO … OFF BALANCE SHEET FINANCING REFERS
TO A CERTAIN ITEMS OF FINANCING FOR EXAMPLE LIKE FINANCING FOR SUBSIDIES SUBSIDY PAYMENTS
WHICH ARE NOT REFLECTED IN YOUR ANNUAL BUDGETARY STATEMENT AND HENCE THEY ARE OUTSIDE OF PARLIAMENTARY
CONTROL USUALY THESE ARE RAISED THROUGH LOANS BY DIFFERENT ORGANISATIONS FOR EXAMPLE LIKE
FOOD CORPORATION OF INDIA HAS RAISED CERTAIN LOANS THEN NABARD HAS RAISED CERTAIN LOAN
NORTHERN IRRIGATION FUND ETC ,SO WHAT THE CAG HAS TAKEN IS THAT THIS KIND OF CAN HAVE
A DOMINO EFFECT ON LATER IN THE FISCAL HEALTH OF THE NATION AND HENCE THERE SHOULD BE CERTAIN
RULES CERTAIN STATED OBJECTIVES THAT THE GOVERNMENT FOLLOWS FOR SUCH ITEMS.AND THESE SHOULD BE
CLEARLY DISCLOSED TO THE PARLIAMENT EITHER THROUGH ADDITIONAL DOCUMENTS THROUGH THE BUDGET
OR AS A IT SHOULD BE BASICALLY A RULES BASED ON A PRINCIPLE BASED ACTIVITY. BUT WHATS WRONG WITH IT IF THE GOVERNMENT
IS HELPING SOME AUTONOMOUS ORGANISATION PICK UP MONEY FROM MARKET AND FINANCE THEMSELVES
LIKE LETS SAY NABARD OR FCI AS YOU MENTIONED THEN WHAT IS WRONG WITH IT BECAUSE MAJORITY
OF THE PUBLIC SECTORS BANKS ARE ALSO GUARANTEED BY THE CENTRAL GOVERNMENT SIMILARLY NABARD
OR ANY OTHER AUTONOMOUS INSTITUTION IS EQUALLY GUARANTEED BY THE CENTRAL GOVERNMENT SO WHAT
IS WRONG IF THEY ARE PICKING UP MONEY FROM THE MARKET AND FINANCING THEMSELVES ?
SIR,THERE IS NOTHING WRONG IN PRINCIPAL ABOVE THIS FIRST OF ALL THERE SHOULD BE CLEAR LAID
OUT GUIDELINES FOR SUCH SORT OF FINANCING THAT THEY CAN WATCH SITUATIONS OF THIS BE
RESORTED TO SECONDLY WHAT IS THE EXPENDITURE BEING INCURRED FOR SO THE MAIN ISSUE WHICH
THE CAG HAS HIGHLIGHTED IS THAT THERE ARE LOT OF THIS FINANCING IS TO NEED THE REVENUE
REQUIREMENTS OF THE GOVERNMENT FOR EXAMPLE SUBSIDY PAY OUTS ON FERTILISER OR FOOD INDUSTRY
SO THESE ARE NOT GENERATING LOT OF CAPITAL RESOURCES FOR THE GOVERNMENT THE THIRD ISSUE
IS UNCLEAR THAT HOW WILL INTEREST PAYMENTS OR THE CAPITAL REPAYMENT ON THIS OCCUR IN
THE FUTURE SO THERE IS CLARITY ON THESE FRONTS THEN OFF BUDGET FINANCING IS NOT A PROBLEM
AS LONG AS IT HAPENS THROUGH THE MARKET MECHANISM AND IT IS DONE FOR CREATING PRODUCTIVE ASSETS
FOR THE ECONOMY . DO YOU KNOW WHAT IS ECONOMIC ACTIVITY RATE
? SIR BY ECONOMIC ACTIVITY RATE YOU MEAN THE
GDP ,NO BY ECONOMIC ACTIVITY RATE I MEAN THE LABOUR FORCE PARTICIPATION .
SIR I AM NOT EXACTLY AWARE OF ,IF YOU CAN JUST GIVE ME A MOMENT TO RECALL …..
SIR BELIEVE IT STANDS AT ROUGHLY I AM JUST MAKING AN ESTIMATE HERE I THINK AROUND 76
% FOR MALE WHAT IS THE MEANING OF ECONOMIC ACTIVITY RATE? SIR ,I AM NOT AWARE OF THIS TERM AND THEREFORE
I WAS ASKING YOU TO EXPLAIN IT SO I , SO WHAT IS THE MEANING OF LABOUR FORCE PARTICIPATION
RATE . SIR,LABOUR FORCE PARTICIPATION IS THE AMOUNT
IS A NUMBER OF YOUR POPULATION BETWEEN IN THE WORKING AGE THAT IS ABLE AND WILLING TO
PARTICIPATE IN THE LABOUR FORCE. ABLE AND WILLING RIGHT .
CAN YOU EXPLAIN TO ME WHAT IS LAFFER CURVE ?
YES SIR LAFFER CURVE TRIES TO IS RELATED TO THE CONCEPT OF TAX ELASTICITY WHICH TRIES
TO SHOW US THAT WHAT IS THE PERCENTAGE INCREASED IN YOUR TAX REVENUE BASED ON A 1 PERCENTAGE
INCREASE IN YOUR TAX RATE AND IT IS AN INVERTED U SHAPE AS IN POINTED BY ARTHUR LAFFER WHERE
THE TAX REVENUE INITIALLY INCREASES FROM A CERTAIN WHEN THE TAX RATE HAS INCREASED HOW
EVER IF THE TAX RATE IS INCREASED BEYOND THE THRESHOLD AMOUNT THEN THE TAX REVENUE ACTUALLY
STARTS DECLINING PRIMARILY BECAUSE THEN INCENTIVES TO ECONOMIC ACTIVITY ARE REDUCED INCENTIVES
TO EVADE TAXES ARE INCREASED PERFECT! SAKSHI WHEN THERE IS DEPRECIATION OF A CURRENCY
THEN A CERTAIN KIND OF CURVE IS CREATED IN THE ECONOMY CAN YOU EXPLAIN AND POINT OUT
THAT CURVE THAT IS CREATED ? SIR ,CAN YOU PLEASE I AM NOT AWARE OF WHAT
YOU ARE ASKING JUST ELABORATE A LITTLE BIT .
WHEN THE CURRENCY DEPRECIATES WHEN THE EXPORTS ARE BOUND TO INCREASE SO A CERTAIN KIND OF
CURVE IS CREATED DUE TO THIS EFFECT OF THE DEPRECIATION OF A CURRENCY ,
SIR I DON’T KNOW WHAT SORT OF CURVE IS CREATED BUT IF WE PROBABLY DISCUSS THE IMPACT OF THE
DIFFERENT ASPECTS YOU MEAN THE SCISSOR SORT OF CURVE WHICH IS CREATED WHERE YOUR EXPORTS
NO THEN SIR I AM SORRY OK. SAKSHI THE DEPRESSION WHICH HAPPENED IN 1929
RIGHT SIR, THE GREAT DEPRESSION ,KEYNES GAVE A SPECIFIC POLICY TO COME OUT OF THE DEPRESSION
SCENARIO CAN YOU EXPLAIN THE POLICY OR THE THEORY THAT WAS POINTED OUT BY KEYNES ?
SIR THE KEYNESION THEORY AT THAT POINT OF TIME FOCUSSED ON THE ROLE OF FISCAL POLICY
WHERE HE ADVOCATED FOR LARGE INVESTMENTS BY THE GOVERNMENT IN PUBLIC SERVICES WHICH WOULD
HAVE A MULTIPLIER EFFECT ON THE ECONOMY AND HEALTHY ECONOMY WOULD COME OUT OF RECESSION
SO HE FOCUSSED ON AGGREGATE DEMAND WHERE AS THE ECONOMIC THEORY BEFORE THAT DID NOT LAY
ANY FOCUS ON AGGREGATE DEMAND BECAUSE ACCORDING TO THEM SUPPLY CREATED ITS OWN DEMAND
OK SO AND THAT THEORY WORKED OUT FINE ACCORDING TO YOU AND HELPED THE WORLD ECONOMY COME OUT
OF DEPRESSION RIGHT. YES SIR. THEN WHY WAS IT THAT AFTER THE 2008 CRISIS
GREEKS WERE MADE FORCED NOT TO FOLLOW THAT PARTICULAR POLICY AND GO COMPLETELY OPPOSITE
TO IT ? SO IN THE GREEK CRISIS THE ISSUE WAS UNSUSTAINABLE
LEVELS OF PUBLIC DEBT WHICH LED TO THE GOVERNMENT DEFAULTING ON HUGE SUMS OF DEBT SO THEY HAD
MUTIPLIER EFFECT ON THEIR ECONOMY ALSO WHERE THEIR
RATINGS DECLINED ECONOMY BASICALLY TOOK A HARD SO ITS OK TO INCREASE ITS GOVERNMENT
SPENDING BUT THAT CANNOT IS A SHORT TERM MEASURE LIKE FISCAL POLICY YOU HAVE TO GENERATE SOME
ECONOMIC ACTIVITY AND … OK
CAN YOU EXPLAIN TO ME WHAT ARE LOST ASSETS? SIR LOST ASSETS ARE THE NON PERFORMING ASSETS
THAT HAVE BEEN ON THE BOOKS OF THAT HAVE BEEN NON PERFORMING FOR OVER ONE YEAR AND THE LIKELIHOOD
OF THEM GENERATING ANY RETURN IN FUTURE IS ALMOST ZERO. OK
WHAT IS THE DIFFERENCE BETWEEN LOST ASSETS AND STRESSED ASSETS ?
SIR, LOST ASSETS LIKE I EXPLAINED ,STRESSED ASSETS ARE THOSE WHICH HAVE EITHER BEEN RE
STRUCTURED OR ARE STRESSED ASSETS WHICH HAVE PRINCIPLE OR INTEREST REPAYMENT DUE FOR CERTAIN
TIME AND HAS NOT BEEN MENTIONED. OK
RECENTLY A REPORT WAS RELEASED WHICH RECOMMENDED THAT THE ROLE OF PAYMENT AND SETTLEMENT SHOULD
BE TAKEN AWAY FROM RBI AND AN INDEPENDENT AUTHORITY SHOULD BE CREATED FOR IT SO WHAT
WAS THE MAJOR REASON OF THAT RECOMMENDATION AND WHAT DO YOU THINK SHOULD BE DONE ABOUT
IT ? SIR,
IN INDIA THERE IS A MOVE TOWARDS A LESS CASH OR A DIGITAL ECONOMY IN INDIA AND THEREFORE
HAVING AN INDEPENDENT REGULATOR WOULD HELP PROMOTE THAT SORT OF INFRASTRUCTURE AND HELP
ENABLE BETTER REGULATION IN INDIA SO WHY THIS MOVE WAS RECOMMENDED HOWEVER SIR WHAT WAS
THE PART OF YOUR NEXT QUESTION . SO THE QUESTION WAS WHAT WAS THE RECOMMENDATION
THE REASONS GIVEN BY IT AND WHAT DO YOU THINK SHOULD BE DONE ,SHOULD IT BE TAKEN AWAY FROM
RBI OR NOT ? SIR ,I BELIEVE THE RBI STAND ON THIS IS THAT
AN INDEPENDENT SORT OF A BOARD CAN BE CREATED WITHIN THE ARCHITECTURE OF RBI SO THAT RBI
CAN BETER BECAUSE RBI IS IN BETTER AS A REGULATOR TO BE ABLE TO MANAGE THIS PAYMENT SYSTEM SO
I BELIEVE THAT WOULD BE A BETTER SOLUTION FOR NOW AND GIVEN THE DYNAMISM OF RBI AS AN
INSTITUTION SO THIS ARRANGEMENT CAN BE RE LOOKED AT AGAIN IN THE NEXT FEW YEARS AS IN
WHEN THE STATEMENT IS RELEASES. OK
OK LAST QUESTION THAT I HAVE IS . WHAT ARE THE MAJOR REASONS BEHIND THE CONSISTENT
RISE IN NPA IN PUBLIC SECTOR BANKS IN INDIA ?
SIR, ACCORDING TO RBI LATEST REPORT ACTUALLY THE
NPA HAVE BEEN DECLINING OR IT IS PROJECTED AS BY MARCH THIS YEAR THEY WILL FALL FURTHER
DECLINED TO I BELIEVE ABOUT 10.3 PERCENT HOWEVER THE PROBLEM IS MORE CONSTITUTED IN MORE PUBLIC
SECTOR BANKS BECAUSE OF SEVERAL REASONS SIR ,FIRST WOULD BE CERTAIN GOVERNANCE ISSUES
THAT THE BANK STATES WHERE THERE IS A LOT OF THERE IS CERTAIN POLITICAL INTERFERENCE
OR CERTAIN REQUIREMENTS OF LOANS TO BE LENT OUT NEXT REASON IS SIR LOT OF THESE PUBLIC SECTOR BANKS SUFFER FROM
SPECIALISED SERVICES SUCH AS THEIR RISK ASSESSMENT FACILITIES ARE POORER THEN THIRD IS SIR MOST
OF THE PUBLIC SECTOR BANKS IN INDIA TEND TO HAVE LARGER BALANCE SHEETS AND THEIR LARGE
LENDING EXPOSURE IS MUCH HIGHER IN SECTOR SUCH AS INFRASTRUCTURE POWER ETC AND IN THESE
SECTORS WHICH HAVE BEEN PRIMARILY….WITH NPA AND SIR OTHER ECONOMIC REASONS ARE THAT
THERE HAS BEEN A LOT OF LENDING WHICH ARE TAKING PLACE IN THE ECONOMY IN THE PAST DECADE DUE TO WHICH THE ECONOMIC
SLOWDOWN CURRENTLY HAS LED TO A LOT OF BUSINESS ACTIVITY HAVING GETTING SLOW DOWN SO IT IS
REALLY NOT ENTIRELY THE FAULT OF PUBLIC SECTOR BANKS .
OK OK ONE MORE QUESTION I HAVE FOR YOU,
DO YOU KNOW WHAT IS PREVENTIVE VIGILANCE ? SIR I DON’T KNOW THE EXACT DEFINITION BUT
WHAT I UNDERSTAND THE TERMINOLOGY IT IS THAT CERTAIN STEPS CAN BE TAKEN PRE EMPTIVE
TO INSURE THAT AN ISSUE DOES’NT GET SNOWBALLED SO FOR EXAMPLE I BELIEVE THE ASSETS QUALITY
REVIEW EXERCISE OF RBI CAN BE SOMETHING WHICH FALLS IN THIS CATEGORY OR THE PROMPT CORRECTIVE
ACTION FRAMEWORK CAN FALL IN THIS CATEGORY WHERE YOU ARE TO SUM UP LIKE A STITCH IN TIME
SAVES NINE SO SOME EARLY ON STEPS CAN BE TAKEN TO IDENTIFY AND DEAL WITH SOME STRESSES IN
LAW WHICH EVER COMPANY OR SECTOR THAT WE ARE TALKING ABOUT. OK PERFECT.

2 thoughts on “Interview Preparation for RBI Grade B 2019 – Interview 17

Leave a Reply

Leave a Reply

Your email address will not be published. Required fields are marked *