Letters: Economic surge
The much-debated bad loans problem is not a sudden development
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With reference to “Band-aid solution” (March 27), as stated in the editorial, “... a performance-linked recapitalisation, though sensible, is a band-aid solution at best” is very true, and any move towards that is not going to deliver the expected results. Inefficiencies are deep-rooted and the removal of many roadblocks which are obstructing the performance of the government owned banks is necessary. The much-debated bad loans problem is not a sudden development. It has been mounting over years, and went up to the present alarming level and became a threat to the very survival of public sector banks.
While the performance of the economy is largely responsible to the growth of the non-performing assets, the role of individual banks can’t be ignored. The efficiency of human resources, irrespective of levels, has deteriorated, and lack of effective remedies to step up the performance led to the present situation. Recapitalisation of the deficient banks is needed to make the weak ones strong enough to compete in the market. Any lag in infusing adequate capital will weaken the capacity of these lenders to do business. Revisiting the efficiency of the human capital is absolutely necessary to ensure it reciprocates the growth and development of such banks.
A surge in all-round economic activity through quick execution of reforms and result-oriented measures are necessary to prevent deliberate non-repayment of dues to the banks. The money for recapitalisation is from the exchequer, and as such no borrower should be allowed to misuse it. Since the growth of bad assets is adversely affecting the tax kitty, even a mild surge will be unaffordable to the economy.
VSK Pillai | Kottayam
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While the performance of the economy is largely responsible to the growth of the non-performing assets, the role of individual banks can’t be ignored. The efficiency of human resources, irrespective of levels, has deteriorated, and lack of effective remedies to step up the performance led to the present situation. Recapitalisation of the deficient banks is needed to make the weak ones strong enough to compete in the market. Any lag in infusing adequate capital will weaken the capacity of these lenders to do business. Revisiting the efficiency of the human capital is absolutely necessary to ensure it reciprocates the growth and development of such banks.
A surge in all-round economic activity through quick execution of reforms and result-oriented measures are necessary to prevent deliberate non-repayment of dues to the banks. The money for recapitalisation is from the exchequer, and as such no borrower should be allowed to misuse it. Since the growth of bad assets is adversely affecting the tax kitty, even a mild surge will be unaffordable to the economy.
VSK Pillai | Kottayam
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard