With reference to T T Ram Mohan’s article, “Try bad bank as an experiment” (February 16), the fundamental question is: Do we have the time to experiment with new institutions or mechanisms for recovering bad loans?
The writer does not want to risk criticism. He has agreed with all the suggestions that are floating around. I do not agree with two points cited by him on the advantages of the present system. First, banks
do not have intimate knowledge of projects.
When those loans become bad due to non-viability or diversion of funds
or external factors, how can it be assumed that banks
had intimate knowledge of these projects?
Second, what leverage do banks
have with companies? Had they possessed that much leverage, they could have made troubled projects
viable by this time.
K V Rao, Bengaluru
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