This refers to ‘Welcome policy shift in managing NPAs’ by S Adikesavan (October 18). It is not clear how collaboration between the RBI and the Government is going to help when many State governments dishonour bank guarantees on loans to PSU units. The irony is that securities issued by the same State governments qualify for SLR! The suggestions made to bring down the sustainable debt level do not address the core problems leading to the creation of NPAs. The solution lies in creating a human force with strong credit appraisal skills and a knowledge-based approach with skills in the infrastructure financing space. Tinkering with the guidelines is not the answer.

Srinivasan Velamur

Chennai

The Government, being the largest owner of PSBs, should come out with a white paper on stressed assets. We have only a truncated picture of the entire situation. If the RBI governor can name five sectors contributing to 61 per cent of the stressed assets, why should he not come out with the full picture? Hasn’t a big chunk of the bad loans been siphoned off for shady deals? How can important decisions be taken by keeping the main stakeholders in the dark? Laxity in cleaning up the balance sheets of PSBs may further aggravate the crisis.

Dipon Mitra

Kolkata

With the RBI announcing its their plan to streamline S4A criteria, there may be a fear that some the stressed companies will start taking further loans. Although it is essential for the RBI to provide various schemes to ease the stress, there should be check and balances through which lenders keep track of their funds so that history does not repeat itself.

Rahul J Gautam

Bengaluru

The shift in approach to NPA management is a silver lining not only for banks but also the economy as a whole. By putting pressure on corporates and releasing a pragmatic NPA policy, things are bound to happen. The fire sale of assets by large corporatesand tightening of the Sarfaesi Act will add teeth to recovery actions. Compliance with Basle norms is desirable, but caution should be exercised. Creating globally big banks will lead to multiple risks.

S Veeraraghavan

Coimbatore

Positive signals are emanating for the banking sector. Although the moves are expected to help bring down stressed assets, it is one side of the story to dress up the existing credit portfolio in banks. It’s not enough to ensure that no further deterioration takes place in the balance sheets. In the name of universal banking, it was unwisely decided to close down DFIs such as ICICI, IDBI and IFCI, and extending inappropriate deposit mobilisation, without minding cost and tenure.

This created a huge asset liability mismatch and paved the way for banks to take on the burden of growth of industry and development infrastructure. A more practical approach to identifying NPAs in banks, with longer than a 90-day waiting period, is needed. More importantly, it is better to address the root cause of ‘banana banking’ by setting up separate financial institutions to cater to the needs of infrastructure and long-term projects, instead of burdening commercial banks.

RS Raghavan

Bengaluru

Do something

India used the Brics summit in Goa to promote its goal of isolating Pakistan. The Brics declaration could be a case of going little beyond generalities: in the prevailing ambiencenobody will condone terrorism but will do little to punish terror groups or pressure the sponsors of terrorism into mending their ways. But given that China and Russia may never shake off their wariness regarding India’s growth aspiration, India is unlikely to achieve a breakthrough. Diplomacy is the key.

J Akshay

Bengaluru

Funding to NGOs

Why can’t US-based NGOs park their funds with the Government and ask it to disburse to deserving causes? This would clear the mist over the intent and use of funds.

Vikram Sundaramurthy

Chennai

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