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Accountability of banks

No amount of equity oxygen can take the NPAs-ridden public sector banks out of their financial ICU

Business Standard 

With reference to the aptly titled write-up, “Bank recap: Band aid for cancer surgery” (October 30), Debashis Basu hits the nail on the head by superbly tracing the footprints of what truly ails our public sector banks. No wonder then that he strongly opposes the government’s latest move to “recapitalise” our unimaginatively non-performing assets (NPA)-stricken banks in an unprecedented manner to suitably enhance their lending capacity and thereby help creating an investment-oriented atmosphere that is so necessary to spur economic growth.

However, the success of the Centre’s latest “generous” move—which entails Rs 1.35 lakh crore of recapitalisation bonds, Rs 58,000 crore of equity raising by these banks from the market and Rs 18,000 crore of equity infusion by the central exchequer—may remain suspect. One tends to agree with Basu when he seeks a clear-cut demarcation of the roles and responsibility of the (as public sector banks’ owner) and their managements, which are well known for professional incompetence, largely following the self-serving path shown by the powerful political lobby and being dogged by some personalised instances of deep-rooted corruption. No amount of equity oxygen can take the NPAs-ridden public sector banks out of their financial ICU till they are insulated from intervention in their day-to-day policy matters and the respective managements are held accountable for professional inadequacies. Reasonably speaking, “perform or perish” should be the key watchword.


Vinayak G, Bengaluru
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First Published: Mon, October 30 2017. 22:34 IST
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