Cleaning banks’ books
Apropos of the report “14 lenders write off loans worth R38,643 crore in FY 16” (FE, June 7), the extent of the bad loans written off by the lenders against the provision created in the books have to be recovered from the borrowers. However, the recovery in prudentially written off accounts are not that encouraging. It is easy to forget the written-off loan accounts as there are no more bad assets in the balance-sheet. The recovery policy which is in vogue directs that all sorts of recovery measures, including legal recourse, need to be taken for realising the dues. Before recognising the account as irrecoverable, banks have to ensure that all kinds of recovery measures have been exhausted. The amount written off by the 14 lenders—of R38,643 crore during FY16—is not a paltry sum. Had the provisions not been created and utilised for writing off the bad loans, it would have gone as dividend to the stake-holders. One-time settlement, and write-offs of bad loans are necessary to cleanse the balance-sheet, but while carrying out the exercise, banks need to take abundant precaution, due diligence and prudence which are absolutely necessary to avoid any questionings in future by the concerned authorities. The government, banking regulator and the Banks Board Bureau must look for error-free measures to avoid possible malfeasance, and ensure that the benefit has been extended only to the deserving borrowers.
This refers to the column “Paytm’s 200 mn customers too ambitious” (FE, May 7). It is imperative to note that payments bank is a million-dollar idea whose time has come. SIP (systematic investment plan) of R100 will make a word of difference for a NREGA worker, an Aganwadi staff, the many dedicated NGO foot-soldiers in the hinterlands, vegetable vendors across India, home-guards, small private English-medium school teachers in mofussil areas and others, to just name a few. Much attention and focus is required to bring in the segments that need modern e-wallet/mobile-banking solutions. “Liquidity for all”, “specially-designed products” should be the USP for payments banks which will be the clincher for digital-age financial inclusion. Easy wallet services will be the game-changer. The Atal Pension scheme has tremendous scope for financial inclusion and pushing savings through payments banks. How a few milk-maids from the hinterland of Gujarat gave birth to Amul should inspire faith in our rural folk. They can turn entrepreneurs with the right support. With great vision and a clear-cut strategy, the landscape can be changed. The payments banks may not be a panacea for financial inclusion, but they certainly are a step forward.