Apropos the report, "Six PSBs bottom line hit as bad loans mount" (May 14) by Namrata Acharya, Anup Roy and Abhijit Lele, while the results of some public sector banks are yet to be declared, those that have been published are painful to investors.
Several banks have contended that the surge in bad loans and profits turning into losses are due to the asset quality review made in terms of the Reserve Bank of India directives to cleanse the balance sheets. Had the banks identified their non-performing loans in time, it would have been possible to administer remedies. By postponing the death of these accounts, banks have paved the way for deterioration in the quality and value of the securities charged, as well as left the door open for wilful default.
Despite the initiatives taken by the government and the banking regulator, there is no marked improvement in the banking business. Mounting bad loans and plummeting returns on assets are beating down the value of the scrips of public sector banks and investors are losing confidence. The government along with the banking regulator and the Bank Board Bureau must look to resolve these issues to save the public sector banks.
V S K Pillai Kottayam
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