Letters: A more inclusive view

With reference to the editorial, "Tip of the iceberg" (February 16), in the last few days there has been a consistent effort to tarnish the image of public sector banks (PSB) over their burgeoning non-performing assets (NPA). It is true that the gross NPAs of PSBs rose considerably in the third quarter, mainly because of additions, as pointed out by the Reserve Bank of India (RBI). This apart, financial newspapers prominently reported the write-off of Rs 1.14 lakh crore by PSBs during the last three years.

As a retired banker, I would like to touch upon the above issues. As stated in your editorial, rising NPAs is not the problem of PSBs alone. Although private banks have lower NPAs than PSBs, I have doubts regarding the figures of the former. While PSBs maintain higher transparency, private banks tend to camouflage their accounts or carry out "evergreening" to prevent NPAs from rising. They grant a fresh loan closing the earlier one that was about to become an NPA, so that the account always remains standard, even though proper repayment may not be forthcoming. PSBs don't resort to this practice, as far as I know.

Regarding the write-off, banks have merely taken an approved and recognised route for cleansing their balance sheets, as they already held full provisions against the accounts in question. The write-off does not mean they can wash their hands off these accounts. The recovery measures initiated through cases filed in courts and with the Debt Recovery Tribunal as well as action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act will continue till the last available security is enforced and the entire amount recovered. But most newspapers covered the write-off without mentioning the recovery measures.

After the nationalisation of banks in 1969, the banking channel became available to all citizens of the country. Primarily because of the PSBs, there is hardly anyone now without a bank account - be it a deposit, direct benefit transfer, no-frills or loan account. When the banks render such a service, isn't it the duty of every citizen, who avails of it, to ensure that the loan taken by him/her is repaid to avoid incidence of NPAs? This applies to corporate houses as well, because their tendency to default is more and their recovery rate is not appreciable too.

B C U Nair Kuthiathode

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