Letter to BS: Mounting NPAs in PSU banks a matter of grave concern

Apropos “PSU banks more prone to frauds, says RBI’s financial stability report” (June 27). It is a matter of grave concern that the health of many banks is deteriorating with rising non-performing assets (NPAs). The situation is a serious threat to the security of depositors’ money in banks. Already the interest on banks deposits is low. To make matters worse, even this cannot be fully pocketed by the depositors since a portion of it has to be earmarked as Income Tax. 

The reason for the accumulating NPAs can be traced to loans given to high-profile people without adequate collateral security. While politicians wield their influence to get loans sanctioned, a common man is scrutinised at every step for the same. Waiver of farm loans further hits the performance of banks prompting commercial banks to reduce interest rates. Reduction of interest rate will be reasonable only when the prices of goods and services show a declining trend. Banks should exercise utmost caution and not allow NPAs to grow. Steps should be taken to recover the bad debts through diplomatic and legal courses. 

K V Seetharamaiah,  Hassan

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