The Banker’s Haircut

The ubiquitous barber and the profession that provides them their livelihood are traditionally found among the lower strata of the Indian social structure. Although it is an essential service in every society, in many Indian languages—including my own language, Kannada—the equivalent of the word “barber” is often used derogatively. In the towns of coastal Karnataka, Gokarna kshoura, literally meaning “haircut in Gokarna” (a pilgrimage centre on the state’s northern coast where devotees offer their hair to the deity), is a pejorative comment used to imply shabby work done. The phrase Tirupathi kshoura (tonsure in Tirupathi) denotes a situation where a person is made to pay heavily to get simple work done. Indian folklore is replete with stories and anecdotes ridiculing the barber.

When Raghuram Rajan was the governor of the Reserve Bank of India, he used the word “haircut” in reference to bankers. Although I have been a banker for three decades, I was at a loss to grasp the relevance of the word to bankers. When I studied his statements carefully, I learnt what Rajan meant: bankers should be ready to forego (write off) larger parts of their bad loans so as to cleanse their balance sheets of their contaminated loans! “Haircuts” started gaining greater dignity as they were deemed to be a cure for banks’ sickness, particularly when a good “doctor” had prescribed it.