The Hindu Business Line : Basel II fallout

This has reference to the article `The potential fallout of Basel II' (Business Line, March 6). One of the reasons why banks are shy of lending to agriculture, small business or industry may lie in the legal system in the country.

In the absence of adequate laws and procedures against errant borrowers, banks could continue to show lack of concern for the genuine needs of agriculture and small-scale industry. If it is going to take years to get legal cases against defaulting borrowers numbered in the courts, why would banks feel enthusiastic about lending to the small sectors? So, rather than both openly and clandestinely goading banks into directed lending, the Government would well do to clean up the environment for banks to decide for themselves where to put their money and make agricultural lending an attractive choice. No banking system can sustain where their ability to stay in business would depend upon the Government's policies to buttress them by taxing the general public.

N. Neelakantan,

Chicago

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