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Letter to BS: Is Bad bank move another cog in the wheel with no benefits?

The new proposal will only embolden the politicians to influence banks to sanction huge amounts of loans for their kith and kin

Business Standard 

Not a good move

This refers to, “Bad Bank: Solution or more problems” (June 13) elaborately discusses the multifarious challenges plaguing the proposal of establishing a separate entity to deal with the stressed assets of banks. In fact, it would be another cog in the wheel with no benefits. Just passing on the buck of recovery of bad loans to another entity would only enable the banks sanctioning the loans to go easy on recovery sans commitment and seriousness from the stage of credit appraisal till the loan ends up with the tag of a non-performing asset. The officials of the bank sanctioning the loans should alone be held responsible for follow up and recovery. The new proposal will only embolden the politicians to influence banks to sanction huge amounts of loans for their kith and kin.

Now that this government has less than one year to go before the General Elections, it would be fair for them to desist from taking major policy changes.

B Venkateswaran Chennai


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First Published: Wed, June 13 2018. 22:57 IST
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