Forget CRR cut, Subbarao should cut down his humour

September 5, 2012

Is Duvvuri Subbarao, governor of the Reserve Bank of India, considering an alternative career in stand-up comedy? In July, Subbarao tried to lighten the usually grey world of central banking with a self-deprecating wisecrack, linking rising prices and his receding hairline.

“I must admit that even at a personal level, I do not know how to interpret inflation. Twenty years ago when I had a thick mop of hair, I used to pay 25 rupees for a haircut … and now, when I have virtually no hair left, I am paying 150 rupees for a haircut,” he said at a conference.

That’s harmless, and pretty funny. But on Tuesday, the governor went a step further.

In a remark that briefly moved markets, the governor joked about appointing a committee to debate whether to do away with the cash reserve ratio (CRR), just before his speech at one of the country’s largest and most prestigious banking events.

He said this in the backdrop of the SBI chief’s recent comment seeking a national debate on whether CRR should be phased out, which had drawn a sharp reaction from deputy RBI Governor K C Chakrabarty.

It’s a competitive world. Information moves markets in today’s sensitive times and investors, traders, money managers, journalists — all need news, some for themselves and some for their clients.

It’s hard to imagine what Subbarao was thinking, as he knows every word he says has the potential to move markets.

Reuters did not flash the comment, but some TV channels and newswires did.

Some might argue that journalists should have been patient before hurrying and snapping the news, but when the chief of the
country’s top lender SBI has proposed the abolition of CRR, the RBI chief’s comment that a panel is being appointed will raise eyebrows.

Subbarao, who took charge in September 2008, has played a vital role and helped India tide over the financial crisis that began the same year. Breaking from tradition, the prime minister’s office extended his tenure by two years in 2011.

Bank shares did react to Subbarao’s comment, but luckily there wasn’t much damage. But now, Subbarao needs to think and decide whether he wants to be a comedian or a central banker. The two things don’t really mix.

(You can follow Aditya on Twitter at @adityayk)


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To believe that the markets were moved by the CRR comments is ridiculous.

Kalra should be aware that the flexibility to cut CRR does not exist, given the money supply in the system. he should follow the LAF auctions carefully. Bankers following that were clearly aware that it was a joke. If markets moved, it was not because of the humour. It was because of ill informed journalists like Kalra, who cannot appreciate sense of humour.

For equity markets to move, or short sell they just need a reason. The reason could be as little as subbarao opening his zipper at the urinal. The real reason for the market movement was that somebody was looking to make a quick buck and he made it. There is an old English adage, “A fool and his money are soon parted” That is precisely what has happened.
Bond markets hardly moved,

Kalra obviously cannot take humour in journalism and professional life. He should return to reporting to the regime of Khap Panchayats, which is where he belongs. After who the bloody hell is he to lecture to the RBI governor on decorum, without knowing the basics of economics?

C Shivkumar

Posted by Anonymous | Report as abusive

I totally disagree. Firstly Subbarao’s penchant for humour is well-known and anyone who covers the central bank would know that.
Secondly and more important, both the SBI chairman’s demand to phase out CRR and KC Chakrabarty’s sharp rebuke were widely reported and were featured on the front page and not too long ago.
If reporters heard his remarks and thought it was worth flashing, it just shows how out of touch they are.
Rather than calling for Subbarao to tone down his humour, how about asking reporters to be more up to date?

Posted by Ramyav | Report as abusive

comedian? arent we taking things a bit too far? give the guy a break – the haircut joke was perfectly legit.

Posted by vare | Report as abusive

I would like to strongly disagree.

Posted by Rajkskumar | Report as abusive

how can a journalist with lack of knowledge who doesnt wait till a sentence is completed send a message to newswire,and how does this make governor comedian.

Posted by nalamati | Report as abusive

Dear all,

Thank you for the feedback. I am in no way saying that the RBI governor has not been one of India’s best central bank governors so far. I also appreciate his sense of humour. His comment on inflation and payments to the barber was funny, as I said above.

However, the only question I raise is that why should the governor say anything at a banking conference which can cause confusion — among journalists, investors, money managers and all. Isn’t it something that is prone to being misread? He also clearly knows that it can affect markets. The question is – was this really needed?

Re: the spat – It was clear that Chaudhuri and the deputy governor had different views on this topic. If the RBI governor says (or rather, jokes) about appointing a committee on abolishing CRR, it was likely to confuse some journalists who will snap it if they need to report real-time news.

Posted by AdityaK | Report as abusive