The published results of public sector banks for the quarter ending December 2017 points to the fact that the remedial measures taken to improve the efficiency of these banks are proving ineffective, causing losses not only for investors and depositors, but also for the disciplined borrowers, who are servicing the loans on time. Disciplined borrowers are not getting any incentives. Banks are not transmitting policy rates on time and accordingly depriving them from the benefits of reduced policy rates. Simultaneously, one can’t overlook the inhibiting factors such as mounting credit costs and unrealised interest. At this juncture, profit maximisation needs to be in the central theme, and various business combinations must be based strictly on profit. However, it should not be at the cost of good governance and ethics.
Attitudinal change across the banking sector is the need of the hour to enable each unit to cross the envisaged business target. Information and data pertaining to prospective borrowers and proposed business activities are easily available; despite that, loans turning bad immediately after disbursal points to carelessness of the lenders. The lacuna associated with delivery of credit and its recovery are many. This needs to be addressed to make financial intermediaries capable enough to pass on the effects of policy rates without lag.
V S K Pillai, Kottayam
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