This refers to ‘Is the RBI paying too much dividend?’ by Himadri Bhattacharya (September 15). It is not known how the quantum of dividend paid could be too high or too low since the related facts are seriously examined by the governor. Besides there are methods available to the RBI to set right any likely inadequacies. We need a pragmatic and viable policy of controlling the quantum of lending against amount in default and continuing lending even when repayment is not done promptly.

TR Anandan

Coimbatore

The RBI’s business model makes an interesting study. The working capital is funded by commercial banks, which maintain a CRR of 4 per cent. As on date, this works out to ₹3,94,240 crore; the aggregate deposits held by banks is ₹98,56,000 crore. The RBI deploys these funds in operation with a minimum bank rate of 6 per cent and the return on CRR works out to ₹23,654 crore. This is the minimum guaranteed return. The aggregate income of RBI from cost-free CRR, which is a part of the dividend paid, will easily run to several lakh crores in the last ten years. In all fairness, when the RBI tightened the screws on NPAs with its stringent AQR, it should have passed on the return on CRR to the banks to strengthen their bottomlines. But PSBs are painted as loss-making. Globally, the concept of CRR has started yielding for banks. CRR and dividend policies should be revisited.

S Veeraraghavan

Coimbatore

What’s that about?

It is strange that without chalking out practical alternatives to raise long-term funds, the RBI has mandated banks to bring their exposure to a single corporate gradually to ₹10,000 crore (‘Banks in a bind over RBI norm’ by K Ram Kumar, September 15). While term lending institutions have been shut, caps have been stipulated caps exposures to be assumed by banks. If the bond route is not viable for corporates, how are they going to bring down their borrowings significantly?

The time is ripe for promoting separate financial institutions for extension of long-term and infrastructure-oriented term loans with long repayment terms. The RBI could think of reviving development financial institutions.

RS Raghavan

Bengaluru

Consolidation and meltdown

This refers to ‘RCom-Aircel merger creates third-biggest operator’ (September 15). RJio’s foray has intensified rivalry in the telecom industry dominated by Airtel, Vodafone and Idea. But the merger has set the stage for consolidation. This will eventually melt down the bargaining power of mobile users to some extent.

With the formation of a new entity, there are chances for another consolidation or joint venture. More consolidation in the telecom market will not only obstruct the ‘good-deal’ option for end-users but also will have some impact on spectrum auction.

S Lakshminarayanan

Cuddalore, Tamil Nadu

Bayer buyout’s good

The $66-billion Bayer takeover of Monsanto certainly augurs well for Indian agriculture, particularly the downtrodden farmer. While a few Indian seed companies sound alarm bells that such consolidation would spell doom for the farmer, this is without substance and more out of fear of introduction of outstanding, high-yielding varieties of cotton and other seeds.

International business groups have found the time right to enter this beleaguered field of Indian agriculture, which must now perform and grow at a scorching pace. More of such takeovers, especially in foodgrain aggregation, packing and retailing directly from the farmer will rescue Indian agriculture from the hands of dalals or middlemen.

G Raviprasad

Email

One-rupee problem

The problems reportedly created by ₹1 balance in the Jan Dhan Yojana recalls the case of a large number of money orders of ₹1 each sent by an unscrupulous lottery syndicate to secure quick returns. After receiving numerous complaints, the Government then banned MOs of ₹1.

Arun Malankar

Mumbai

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