Letters to BS on speeding up execution of economic reforms for growth

The dismal performance is negatively impacting the health of the PSBs and their capacity to lend

With reference to “Stop attacking capital” (January 30), rather than looking for populist reforms, the government needs to speed up execution of economic reforms to accelerate growth as envisaged. Private capital flow for investment is shrinking because of the persisting stress in the banking sector. The proposed recapitalisation of public sector banks (PSB) and related reforms are crucial in driving growth of private investment, and therefore needs quick execution. Despite the use of various measures and tools to maintain the asset quality and recovery of the accumulated non-performing assets, the results on these counts are not encouraging. This dismal performance is negatively impacting the health of the PSBs and their capacity to lend.

While consumer price inflation is within the targeted range, the monetary policy committee must look to cut the policy rates to boost private investment. Banks’ lending rates have to be reduced to augment the debt servicing capacity of India Inc. to pave way for removing the persisting stress of lenders. The government and banking regulator should bestow more attention on the performance of PSBs as they are occupying a major space in the banking sector. Banks must go after the defaulters to speed up resolution of bad assets to redeploy funds, besides playing an effective role as drivers of growth.

VSK Pillai, Kottayam Letters can be mailed, faxed or e-mailed to: 

The Editor, Business Standard

Nehru House, 4 Bahadur Shah Zafar Marg 

New Delhi 110 002 

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