Letters to the editor

Updated: July 24, 2016 11:44 AM

Bank recapitalisation
This is in reference to “PSU banks get small lifeline of R22,915 cr”(FE, July 20). Despite the recapitalisation of 13 PSBs with R22,915 crore market is yet to regain its lost confidence on the state owned banks due to the all time elevated levels of the non performing loans, and the growing diminishing returns. While all non-performing loans are not irrecoverable, yet the realisation of the bad loans is time consuming and need strenuous efforts. Simultaneous to the recapitalisation, it is also equally important for the government and banking regulator to look for more ways to accelerate the recovery or improving the quality of the bad assets. Since recapitalisation is at the cost of the exchequer, it is imperative on part of banks to move aggressively to drastically improve the efficiency of the organisation, particularly at a time when government banks are showing either negative or diminishing returns. Government being the majority stake holder has to look for way to further strengthen the banks. Public sector banks are not only meant for propelling economic growth and social development, being a business entity they should improve performance and must provide adequate returns to the investors as well.
VSK Pillai
Kottayam, Kerala

Autonomy for PSBs
To what extent will the infusion help banks to meet regulatory compliance or for that matter expand their credit is anybody’s guess. It is estimated that PSBs will require an additional capital support of R3 lakh crore spread over a period of three years. As the largest stake holder in PSBs, to what extent government will be able to meet these additional capital requirements amid a not so favourable fiscal situation is a big question. A permanent solution lies in taking some bold initiatives and reducing banks dependence on the government. Ensuring greater functional autonomy and a more professional management of operations, better risk management profiles are critical for banks to achieve independence.
Srinivasan Umashankar

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