Window-dressing

This has reference to the editorial “Stressed-out banks” ( Business Line , July 29). Shrinking margins are a major cause of concern. Banks have umpteen ways to camouflage the NPAs; restructuring of assets is an officially permitted method. Restructuring, in most cases, is only postponement of the inevitable, to present a better picture.

Window-dressing isn't limited to deposits and advances, but in deciding NPA levels as well. Again, in trying to balance the bottom line and top line, banks often focus on balance sheet size and take high-cost deposits and also go in for low-cost short-term lending. Hence, window dressing continues to maintain the lead position in factors affecting the Net Interest Margin (NIM).

The present system of making provisions for bad debts and write-offs also affects the depositors, good borrowers, investors and all stakeholders rather than bad borrowers. This aspect also needs to be thoroughly re-examined.

What banks need to focus on, to improve NIM, is preventive measures like better credit sanctions and monitoring. Proper diligence in sanction and entry-level scrutiny of borrowers is needed. Many times, procedural delays in extending financial support affect the cash generation capacity and servicing of interest and instalment, leading to defaults.

L. Rangarajan

Strengthen profitability

This is with reference to the editorial captioned “Stressed-out banks” ( Business Line , July 29). It has been rightly pointed out that the Net Interest Margins (NIM) of banks are under stress. Banks have constraints in hiking the deposit rate to retain customers due to competition, despite increasing Non-Performing Assets (NPA). Banks may hence go for a few hikes in the lending rate. Instead of learning to live with lower NIMs, banks can improve their profitability by effective NPA recovery and increase the credit off-take on healthy guidelines, such as “loans to the merit of the proposal”, to avoid future NPA.

N. R. Nagarajan

Sivakasi

Data collection

The article “Policymaking marred by incorrect data” ( Business Line , July 29) made useful reading. Various socio-economic plans, policies and programmes in India haven't achieved the desired results because of faulty data in parameters such as population, poverty and illiteracy. It's imperative that the officials at the grass root level, who are entrusted with the task of collecting data on the aforesaid parameters, show commitment and utmost care in the work.

They must realise that the State spends crores of rupees on the welfare of the people in general and the poor in particular. It is, hence, imperative that the data is very accurate.

S. Ramakrishnasayee

Ranipet

Nuclear dilemmas

“India's nuclear policy dilemmas” ( Business Line , July 28) had a crystal clear presentation on India's nuclear stand. As per the current advancements in nuclear technologies, globally, an RPV's lifespan is approximately 40-50 years, but India doesn't have to worry about this issue as more advancement will be possible in the future and hence we can cope with the times.

The entire scenario may see a big change if we could have a permanent seat in the Security Council in the coming years. Let's hope for the best. Who knows, one day, we might be supplying technologies!

Dr S.Vishnu Prasanna

Chennai

Areas of neglect

This refers to “Tales of a neglected hinterland” ( Business Line , July 29). Though privatisation and globalisation occurred two decades ago, many states in India are still in need of basic amenities like food, cloth, shelter, water, and education. The price hike on all the basic necessities should hence be controlled.

Though social welfare programmes and infrastructure development projects exist, they do so only on paper, without the implementation process.

Education across all sections of the society should be taken up by providing fee concessions, with free education till the primary level; equipment with the latest technology should also be provided to less fortunate children.

NGOs, civil society, corporates, and the government should take up strategic planning in implementation of welfare programmes.

Technical and financial audits should be periodically done so that the utilisation of funds and optimum level of resources can be kept account of.

Frequent interaction with the public and media regarding the status of implementation of welfare programmes will make the functioning of the government transparent and also make politicians accountable to the public in the long run. This will even have an effect during contesting for elections.

Vedula Krishna,

Visakhapatnam

Languishing villages

It was interesting to read “Tales of a neglected hinterland” ( Business Line , July 29). It is now time to evaluate the impact of all development programmes, including those aimed at poverty alleviation, and the financial investments made in welfare schemes in the areas of Rae Bareli, Sultanpur and Amethi vis-à-vis three other districts of UP. The results of such a study should be placed on the Internet for greater transparency and research purposes.

Dr Amrit Patel

US

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