Letters: RBI's concerns

With reference to “Restoring credibility” (April 13), the Reserve Bank of India (RBI) governor’s apprehensions with regard to loan waivers and other critical issues are a good sign to lend a durable credence to the regulatory mechanisms and in its endeavour to make the banking system strong. The fact is that over a period populist measures indulged in by the political class have retarded the growth process, thereby widening the fiscal deficit. Politics can never be good unless the economics to be pursued is also good. Agreed that there are exceptions, but massive loan waivers are something that can severely impact the recovery process of banks, which has already taken a big hit.

Urjit Patel has warned that such loan waivers serve to undermine an honest credit culture. Concerns about the mounting non-performing loans of public sector banks (PSB) and the pressing need for their quick resolutions, meeting the additional capital needs of PSBs and the need to think beyond recapitalising the PSBs in terms of evolving alternatives such as divestment of ownership etc., and the delayed transmission of monetary policy cuts of RBI by banks resulting in room for more rate cuts are issues that are getting much needed attention.

Srinivasan Umashankar | Nagpur

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