Letters: Address the root cause

The proposed new set of WLTF banks will have difficulty in generating matching liabilities

The editorial “Financing a recovery” (April 25) brings out a stark fact that multiplicity of lending institutions may not necessarily accelerate financing recovery. In building a robust ecosystem of lending, recovery and lending to support growth, it is essential to address root cause issues. Banks should have asset liability matching system that calls for allowing access to liabilities of similar tenure for which they are supposed to lend. Mismatch in the tenure of liabilities and assets leads to liquidity risk which again adds to lending cost of the banks. Currently commercial banks are allowed to access short- to medium-term liabilities