Bootstrapping India
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Why   is   Reserve   Bank   of   India   a   highly   corrupt/defunct   institution?

    Contents

  1. Introduction
  2. The MAIN power of RBI
  3. Cuases behind defunctness/recklessness of RBI-Governor/directors
  4. Solution

Introduction

I will NOT compare Reserve Bank of India, with Reserve Bank of US, as BOTH are defunct institution, due to inherent oligarchy lack of democracy wrt those institution.

On in this artcile, I will confine myself to enumerating how RBI and its Chairman, Directors and senior staff-members' ruin commons of India, how they manage to get away with this and what can be done to correct these flaws.


Main powers of RBI

As of today, Govt of India cannot function without a LEGAL TENDER --- a unit that it would use for
  1. giving payments as salaries, rent etc to run police, military, courts, prosecution, maintain parks and forests etc
  2. acceping taxes from private persons to create funds to meet above payments
So to meet above two functions, govt of India needs so called "Indian Rupee" which is the legal tender of India. A welcome side-effect of above is, that the above legal tender also serves as means for private persons for exchange of payments, and storage of "purchasing powers".

The Reserve Bank of India (RBI) is the agency which issues legal tender and also decides which companies will get the label of BANK. What is the significance of the label "bank". When RBI labels a company as "bank", the credit issued by that company gets the status of "money". To clarify, say RBI issues a note of Rs 1000/-, which it gives to GoI, and GoI gives to some private person X as payment for his service. Say X deposits that Rs 1000/- note with a company C. Now say C issues a loan of Rs 900/- to Y. Now a Rs 15,00,000 crore question is :
  1. Does so called "money supply" i.e. M3 increase by Rs 900?
  2. Or it remains unchanged?
The answer, as per today's laws, is --- if RBI has labeled the company C as a bank, then so called "money supply" increases or else it remains unchanged.

So RBI's chaiman, directors and senior staff has two important powers
  1. issuing rupee notes
  2. deciding if credit issued by a company will be labelled as "money" or not, which RBI's senior staff decide by issuing a label of "scheduled bank" to a company"
These powers of RBI's senior staff are DISCRETIONARY powers. PM and Finance Ministers, and senior MPs have some control over them, as PM/FM can expel a RBI's chaiman/director. And as always, the individuals with whom RBI's senior staff members have nexuses also have influence over them. In any case, the common men DO NOT have an iota of control over RBI's senior staff.

The MAIN problem

The RBI's senior staff has control over banks' senior staff, and so the RBI's senior staff members ensure that banks' senior staff members would give loans worth 100s of crores, often without any collateral, to the elitemen with whom RBI's senior staff has nexuses. Due to the nexuses, these elitemen get away without paying it back, and thus create NPA. To cover the NPA, the RBI's Governor/Directors and Finance Minister increase the money supply, which reduces the net purchasing power of commons. This ruins commons's lives.


Cuases of the problem

The reason why RBI's Governors/Directors and PM/FM can raise money supply recklessly is becuase the commons in India have NO procedure by which they can control money supply or supply of legal tender. The citizenry need NOT control private currencies if any, or bonds/shares which serve as quasi-currency, but citizens MUST have firm control on legal tender that is issued by the state. Once citizenry gets administrative procedures, by which they can control money supply, RBI's directors' recklessness will reduce.

The reason why RBI governors/directors raise money supply recklessly is to serve the the elitemen with whom they, or PM/FM and other banks' chairman/directors have nexuses. In many cases, the RBI directors and directors of many banks are elitemen themselves. How can citizens check these nexuses? I do NOT know of any way that will ensure that RBI/banks' chairman/directors remain nexusfree, but I certainly know of procedure that will ensure that RBI/banks' chairman directors DO NOT misuse their powers recklessly, and if they misuse it, extent will be much less than today.


How can citizens of India reduce corruption/nexuses in RBI?

What steos can citizens of India take to reduce the corruption/defunctness of RBI's chairman/directors, and reduce corruption/defunction of PM/FM wrt issuance of money supply and legal tender? As usual, solution is TRIVIAL.
  1. Step 1 : The citizens of India should force MPs to create procedure that would enable citizens to pass laws Parliament. Please read LM.03 to see the procedure using which citizens can pass laws in Parliament.

  2. Step 2 : The citizens of India, using LM.03 should enact procedure CURR.01. This procedure would enable citizens to expel RBI/SBI chairman/directors using RLPP, and the procedure also enables citizens to expel a junior staff member using Jury Trial. This will reduce the extent to which RBI/SBI-governor/directors and other staff members misuse their powers.

  3. Step 3 : The citizens of India, using LM.03 should enact procedure CURR.01. This procedure would enable citizens to expel RBI/SBI chairman/directors using RLPP, and the procedure also enables citizens to expel a junior staff member using Jury Trial. This will reduce the extent to which RBI/SBI-governor/directors and other staff members misuse their powers against commons.

  4. Step 4 : The citizens of India, using LM.03 should enact procedure CURR.02. This procedure would enable citizens to reject the proposal submited by RBI chairman/directors to increase supply of legal tender. This will ensure that RBI chairman/directors cannot recklessly deflate the currency.

  5. Step 5 : The citizens of India, using LM.03 should enact procedure CURR.03. This procedure would enable citizens to convert money supply, and other financial entities like GoI-bonds, bonds of GoI-owned financial companies like LIC, UTI etc into legal tender.

These TRIVIAL steps will reduce corruption/defunctness in India's RBI to a level MUCH LOWER than that in West.