Narayanan Vaghul: The deskless banker who deepened India’s money market
₹1.13 trillion; the coupons ranged from 6.89% to 11.96%, the interest rate determined by the issuer’s credit rating and the CP maturity profile, apart from the market’s liquidity position. In fact, Reserve Bank of India (RBI) data shows even limited liability partnership firms (such as audit or management consulting firms) have been relying on CPs. Both CP issuers and investors should be thanking this banker.
On a much larger scale, appreciation is also due from the Government of India—specifically, from the finance ministry—for providing a critical instrument to tide over temporary mismatches between receipts and expenditure: the 182-day treasury bill. The government’s net borrowings through this instrument in 2021-22 and 2022-23 amounted to ₹712.52 billion and ₹524.26 billion, respectively. The late banker is Narayanan Vaghul, who died on 18 May.
He was chairman of the development finance institution Industrial Credit and Investment Corporation of India, which later morphed into ICICI Bank. The Indian money market owes a debt of gratitude to Vaghul for the depth and stability he has imparted to it. As chairman of a working group on the money market, Vaghul in 1987 had advocated the adoption of various short-term money market instruments like CPs, CDs and 182-day T-bills; this was in addition to recommending the use of bill discounting to replace the antiquated system of receivables financing or suggesting the establishment of a discount house, precursor to today’s primary dealers.
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