COUNTER VIEW: Checks and balances are hogwash

It's best to keep PSU funds out of foreign banks. The government is making this offer purely as a bargaining point in WTO talks. The proposal lacks intrinsic merit.
There is no reason to believe that public sector banks cannot manage funds equally well. Besides, in the event of fraud it is easier to act against Indian than foreign organisations, even in an age of globalisation.
Investors in the Unit Trust of India were saved when the government prepared a bailout package of Rs 14,500 crore.The investigation that followed was of a reasonably comprehensive nature. More recently, Ramesh Gelli of Global Trust Bank was booked for helping Ketan Parekh play the markets.
Without an Indian management at the helm, it would have been far more difficult for the government to proceed against the culprits. Globalisation is all very well, but it has yet to evolve credible inter-national arbiters and regulatory mechanisms, whether in politics or finance.
The RBI or the SEBI will not be able to proceed against foreign banks in the event of fraud. They will run up against diplomatic and legal hurdles, because the laws of nation states are still supreme.
Standardised accounting practices are fine in principle, but can we be sure that an Enron, where auditors colluded with erring firms, will not happen again? Corporate governance is a pet term with seminarians, with feeble evidence of its existence in the real world.
After the collapse of Enron, it took over four years and Rs 10,000 crore to revive the Dabhol plant. A fraud of the ING Barings variety will not only leave us twiddling our thumbs, but also bleed India in terms of financial and transactional costs.
As India proceeds against the guilty, it can expect ambassadors from the developed world to say that its actions would hurt investor sentiment and economic ties. In sum, the RBI should continue to adopt a cautious approach towards financial sector deregulation.