The article, ‘Opening the gates of hell in Yemen’ (April 8) by Stanly Johny is right in that that external military intervention does not solve civil strife. However, when local leaders harbour regional or global ambitions or foment trouble in other countries not involved in the local struggle, it becomes necessary for those affected to intervene.

That is why conflicts in Yemen, Iraq, Afghanistan and Syria add to India’s anxiety. Al Qaeda, ISIS and the Taliban export terrorists here and use India as a recruiting centre for their activities. Add to this the impact of battles in these countries on our economy, particularly oil prices.

YG Chouksey

Pune

Banks in a fix

After the announcement of the bi-monthly monetary policy banks are in a fix whether to reduce their base rate. Some banks have their own reasons for not accepting the RBI’s suggestion. It is not just the repo rate change that determines the base rate change. It depends on the cost of funds, deposit mix, liquidity mix and credit offtake. Business is tepid as credit offtake is low. Credit growth has slowed to 11 per cent in 2014-15, down from 15 per cent in the previous year. Banks have also seen a major stress in their balance sheets due to the high level of bad loans. Banks get little fee-based income nowadays.

From 2015-16, restructured advances are also to be shown under NPA. Apart from this, banks have to pay salary arrears this year. The governor’s suggestion for a policy change in deciding base rate from average cost of deposit to marginal cost of deposit also has its problems. When marginal cost of deposit goes up it is detrimental to borrowers and when it comes down it is detrimental to depositors.

TSN Rao

Bhimavaram, Andhra Pradesh

Right decision

This refers to your edit, ‘Towards better transmission’ (April 8). The governor has taken the right decision to hold the key rates to allow past rate cuts to get transmitted into the banking system. The RBI is right when it says it is concerned about oil prices going up again. Forex reserves are at comfortable levels because of the prudent policies of the RBI. It was great to hear that the interest rate decision by the Federal Reserve will not affect our domestic policy decisions.

But the room to cut rates seems to be limited given the inflation expectations. We are almost done on the rate cut cycle unless we have a situation where the retail inflation undershoots the RBI’s expectations for a sustainable period of time, which is highly unlikely. Now the government should act on supply side reforms and make sure retail inflation stays low. The industrial policy of the government also plays a key role. It is time the government thinks and acts on securing our energy needs by way of more investments in oil and gas exploration and the right kind of policies encouraging investments in alternative energy.

CR Arun

Email

Raghuram Rajan took a potshot at commercial banks for not reducing lending rates. At last he was able to prompt the lenders such as the SBI, ICICI, and HDFC Bank to cut rates; others are likely to follow. This will make loans cheaper in respect of homes, cars, small and medium enterprises, and large corporates, and will ultimately help borrowers and lead to greater flow of funds. The RBI has maintained the status quo. Raising the cap on lending by microfinance institutions from ₹50,000 to ₹1 lakh will help meet the credit demand in rural and semi-rural regions; this is undoubtedly a healthy move.

The other salient point includes issuing rupee bonds in the international markets; that will help raise funds without foreign currency risk. The review has also allowed financially strong urban and co-operative banks with a net worth of ₹100 crore to issue credit cards. The RBI has also taken care of the interests of depositors by not lowering the interest rate in view of the existing retail inflation at 5.4 per cent, and depending upon its expected dip to 4 per cent in August 2015, the bank will consider a cut in the interest rate. In a nutshell, the current monetary policy is a good one.

Jayant Mukherjee

Kolkata

Encourage savings

This refers to the report that State Bank of India and ICICI Bank have cut their lending rates by 15 basis points and HDFC Bank by 25 basis points. The cheap-money policy, one feels, will make the consumers spendthrifts and poorer in the long run. The producers, of course, can reap huge profits because of increase in aggregate demand. As far as the Indian economy is concerned, it is imperative that the RBI encourages people to save more money with the banks (which is possible only if they hike the various deposit rates), which in turn can enhance the capital formation, employment, income and output in the country.

S Ramakrishnasayee

Ranipet, Tamil Nadu

Right perspective

The editorial, ‘Towards better transmission’ (April 8) put the issues of rate cuts in the right perspective. Banks are given autonomy for their functioning in addition to the periodical directives of the RBI to keep the health of economy protected through various means. The concept of risking is an inescapable part of the brief of banks and on this count perceiving bad debts unilaterally stalling the natural flow of benevolence arising out of earlier reduced repo rate amounts thus to financial victimisation of mute clients.

The RBI must issue a moratorium to calculate base rate on the marginal cost of funds to maintain uniformity among the banks. The banks have to weather domestic financial winds and global economic storms to protect their financial verticals and portfolio welfare; expecting the RBI to fully come to their rescue in the face of volatility and the policies of foreign banks is anathema as money will not grow unless risking is adroitly exercised.

B Rajasekaran

Bengaluru

Water purifiers

In R Ravikumar’s interview with Mahesh Gupta (‘Water purifier business is undergoing consolidation’, April 7), the importance of RO has been rightly brought out. In these days of pollution RO enabled purifiers are a necessity even for urban water supply. Unfortunately even leading purifier makers in India do not recognise this. They give importance to TDS which can be easily demonstrated to customers by measuring it before and after passing the water through their purifier. Even in the highest end purifiers they bypass the RO purely on the basis of sensed TDS.

G Raman

Bengaluru

Brutal act

The shooting incident at Chittoor in which the Anti-Smuggling Special Task Force (RSASTF) killed 20 people in separate encounters is a brutal act. By killing poor migrant workers from Tamil Nadu it is clear that the trigger happy RSASTF acted without restraint. That the woodcutters were unarmed and were only working for their smuggling masters, makes the massacre more macabre. The presence of red sanders logs with white paint and code numbers at the site also makes one believe that the wood was brought from a government stockyard and planted at the site. The unprecedented action has led to the biggest toll in a single encounter in the history of the region and has obviously raised hackles on the use of such brute force.

NJ Ravi Chander

Bengaluru

The Andhra Pradesh police have done grave wrong. The pictures of semi-clad dead bodies of the slain labourers strewn on the soil along side the planted logs have strengthened our suspicion of foul play and caused us deep emotional distress. It is appalling that the police have drawn no distinction between smugglers and labourers and behaved in such a trigger-happy fashion. This cold blooded carnage, executed clumsily, has demonstrated the cops’ criminal disposition and disregard for human life.

What is at issue is not the fact of smuggling, but the assumption that the lives of daily-wage labourers are expendable. The humble woodcutters just hire themselves out to rapacious sandal smugglers-cum-traders and get paid peanuts. Sadly, many people blame the hapless victims for their tragic deaths in suspicious circumstances without giving a thought to what has driven them to risk death for a pittance — dehumanising poverty.

G David Milton

Maruthancode, Tamil Nadu

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