Comments
Regarding the editorial ‘Trouble in the hills’ (June 24), the indefinite agitation launched by the Gorkha Janmukti Morcha (GJM) for a separate Gorkhaland seems to be unjustified and has affected life in the hills forcing tourists not to visit Darjeeling. This is bound to lead to a sharp fall in the State revenue.
The interests of people of the hills are of paramount importance and cannot be ignored by the State Government. Smaller States are favoured for smooth functioning and e-governance. But whether there are enough grounds for bifurcation, and resources for the region’s economy to grow after bifurcation needs critical survey. In the case of Gorkhaland, the move is not sustainable. Tea estates alone cannot generate the revenue needed to run a separate state. It is worth noting that Jharkhand was carved out of Bihar, but even with more industries there, its progress is no better than Bihar.
It will be good if the agitation is immediately withdrawn and an amicable solution is discussed.
Jayant Mukherjee
Kolkata
Banks in a tight spot
This refers to ‘New dynamics at work in credit policy’ by RK Pattnaik and Jagdish Rattanani (June 26). The formation of MPC has given a new dimension to the policy initiatives of RBI, till now the prerogative of the RBI Governor. The decline in GDP growth post-demonetisation along with the declining trend in inflation could have influenced MPC member Ravindra Dholakia to push for a 50-basis point rate cut.
No doubt from the short-term perspective it appears logical. But considering that domestic investment is not picking up, and the uncertainty surrounding the impact of GST on inflation, other members of MPC would have voted against a rate cut, preferring instead a “wait and watch” approach. The fact that the earlier rate cuts were not fully passed on by banks to the end client might have also influenced their decision. The problem banks face of stressed assets along with paucity of capital has put them in a tight spot with little or no scope for credit expansion to fuel growth. Overall, banks are going through a consolidation phase now.
Srinivasan Velamur
Chennai
PSU banks’ cross-merger
Following the merger of five associates with the parent State Bank of India very recently and strong political will demonstrated by the government, consolidation among public sector banks has now gained momentum. Cross-merger, however, is not an easy proposition as even the smallest public sector bank now has total business of around ₹2 lakh crore with a fairly large network, requiring many administrative and technical issues to be sorted out.
For a sound, strong and vibrant banking system, the country certainly needs to look at having a small number of bigger banks, instead of large number of smaller banks that pose a risk to the system. A beginning can, therefore, be made in the direction by identifying the large (balance sheet size of ₹6 lakh crore and above), medium (₹3 lakh to ₹6 lakh crore) and small banks (less than ₹3 lakh crore) and merging the small banks with their bigger cousins so that the merged entity gains geographical reach to acquire a pan-India presence, achieve economies of scale, and enjoy a host of other benefits.What we need is five to six big and strong banks of the size of SBI or even larger, to take on the future challenges including funding cross-border acquisitions.
Srinivasan Umashankar
Nagpur
Promoting UPI
Referring to ‘UPI for whom?’ (June 26), Atal Pension Yojana, which went online recently would be a game-changer if wide publicity is given for making monthly payment through BHIM. As rural-based population is mostly on the move for agricultural work or for social compulsions, clubbing and advertising payments of pension while sending alerts in advance on mobile will boost Atal scheme as well as BHIM.
Good publicity for PMJJBY and PMSBY via mobile alerts and request to use BHIM to enroll for these insurance schemes in June to avail of their full benefit will be ideal.
NK Bakshi
Ahmedabad
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