High-speed trains

While “High-speed trains are coming” (April 18) talks of interesting projects, the planners would do well to keep in mind the debate raging in Britain on the advisability of going ahead with HS2. Peter Woodward, a British Rail geo-expert, had questioned the safety and stability of bullet trains.

Even in China the fervour for bullet trains has reportedly waned. About 70 per cent of fast train projects have either been postponed or suspended. Alstom India has recently stated that bullet trains will not be viable for another ten years in India.

The very idea of sending a delegation to China at this juncture was untimely. Even more amusing is the argument that a contract with China will ‘usher in a new era’ and calling it a ‘socially desirable investment’ when the bulk of our population cannot afford such transport. On the political front, China’s latest move to move into Laos with its rail project has already raised concerns among nations in the south-east on whether China is using these projects to further its economic interests. Experts say China can turn these business forays into military strength.

Instead of such ambitious projects, the Railways should focus on those who travel 87 hours from, say, Dibrugarh to Kanyakumari or of jawans who travel from Jammu to southern cities, spending almost three days on train. It is time to ensure cleaner coaches and spend on renovating the thousands of bridges that have outlived their service.

S Subramanyan

Navi Mumbai

No need for postal bank

This is with reference to “Why not a “Post Bank of India?” (April 18). Such a proposal is beset with many issues. First, the investments proposed for a post office bank would yield a low margin of not more than 1.5 per cent, insufficient to break even, even in the long term. Second, lending to individuals or small and medium enterprises is a different ball-game.

Post-office staff are at present ill equipped to handle this type of business. Corporate lending, a mammoth task, cannot be taken up in the next five years or so. It could be argued that postal banks can poach bankers having these skill-sets. But this is impractical as post banks cannot attract talent without a market-linked remuneration system.

Many among the existing players, especially from the public sector, have failed to evolve a viable business model, even after 40 years (the first set of private banks were nationalised in July 1969). In fact, most of the state-owned banks are in intensive care unit and gasping for breath. In the circumstances, why add another institution?

As it is, the postal bank system has been incurring massive losses (about ₹8,500 crore).

Within three years of establishment, PBI may have to be re-capitalised, the way the Government has been re-capitalising PSBs through budgetary provisions. And while the mantra of “financial inclusion” sounds attractive, as a business proposition, it is hit by the lack of profitability.

PSBs have spread financial inclusion only through deposits and not through lending operations. And these deposit accounts usually become dormant after some time.

KV Rao

Bangalore

Post offices must be enabled to offer financial services to the masses such as receiving fund transfers, cheque-cashing, small loans, enabling bill payments, international money transfers and providing prepaid cards to which salaries or benefits could be transferred. All this can well be done without disturbing the financial structure of post-offices — retaining them as a safe haven to park one’s savings backed by sovereign guarantee as distinct from banks, where deposit is covered by insurance to the limit of Rs 1 lakh.

Just as banks are enabled to provide low-cost loans to businesses, post offices must continue to provide low-cost finance to the Government. The current ceilings on maximum permissible deposits in post offices must be substantially increased to attract more deposits from high net worth individuals. In any case there is no need for post offices to be turned into banks.

KVA Iyer

Kochi

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