Letters: Control risks

With reference to the report, "PSBs to get Rs 70,000 cr from govt in 4 years" (August 1), the figure appears to be a big one for the 22 claimants - excluding the five associates of the State Bank of India. But considering that the amount would be infused over four years, it is quite insignificant. The balance capital of Rs 1,10,000 crore would be raised from the market. It has been assumed that market valuations would improve on account of "far-reaching governance reforms, tight management of non-performing assets (NPA), risk controls and a better operating environment".

First, the present government has attempted certain reforms but these are not far-reaching, considering the number of issues in management. Second, public sector banks (PSB) have been talking about reining in NPAs for five years without much result. Significant legal reforms should accompany banking reforms. Bad assets can be recovered if there is fear among promoters.

PSBs cannot ramp up their risk control in credit management without expertise and skill-set. As for improvement in operating environment, new business and higher share in existing good business are taken away by their private sector peers, armed with better marketing skills.

After four years the government would regret its decision to improve the capital of PSBs. Let a few players die a natural death. Let the suggestion of privatisation of PSBs come from the employees. Let existing employees continue under a private management.

K V Rao Bengaluru

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