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Letter to BS: A loan-laden weak public sector bank is like a health hazard

The government must give free hand to the banking sector to revive itself

Business Standard 

banking sector

This refers to “Banking on the Union Budget” (July1). I strongly support the views expressed by the author that a loan-laden weak public sector bank is like a health hazard and cannot make any good for the society. The suggestions to improve the financial health of the banks by giving a free hand to the top management is well-taken. Recently, the Minister of Finance, Nirmala Sitaraman, asked for suggestions from public to improve financial sectors by preparing a foolproof Budget shows good intentions of NDA government.

I may also add that privatisation of weak banks is not a bad idea if those can be turned profitable by appointing senior bankers of private banks as the chief executive officers. After all, what is the harm in taking a bold decision for the welfare of employees of the banks as well as for the society? The financial data given by the author to revive weak banks are scaring as they show how this banks underperformed over the years at the cost of public money. How long can the government infuse liquidity into weak banks even by transferring some reserve capital from the Reserve Bank of India? The problems are similar in nature for the weak banks and troubled NBFCs as both are suffering from liquidity crunch and must be taken out of the mess by innovative thinking without any impact on the fiscal deficit. It is rightly said that it will be a cakewalk for the government that embraced demonetisation.

Partha Sarathi Mukhopadhyay, Nagpur

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First Published: Mon, July 01 2019. 22:24 IST