This is with reference to ‘Lenders must classify wilful defaulters within 6 months of an account turning NPA’ (September 22). Public sector banks require a robust recovery system, especially to get back money lent to big borrowers. Political meddling is one of the important reasons for rising non-performing assets (NPAs) in public sector banks. It should be entirely left to bankers whether they want to finance a company or restructure a loan and there should not be any political pressure on the banker. Waiver of loans puts heavy financial constraints on the banking industry. Most of the loans are waived either with an eye on elections or meeting the demands of various political parties.
The government should extend full support to banks to deal with big, wilful defaulters who have escaped to foreign countries.
Too little, too late
It is surprising that the direction from the RBI to lenders to classify wilful defaulters within six months of their account turning into an NPA comes after more than ₹25-lakh crore has been waived off or written off. Even a small loan is considered only after weighing various factors and ascertaining security and guarantee. For sanctioning loans of huge volume, it appears none of these factors are applied. Even the present direction of the RBI is only to classify the defaulters and not about lending patterns or ensuring repayment processes. Absence of deterrent punishment and keeping banks’ functioning away from political interference may be considered to safeguard people’s money from wilful looters.
Propping up the economy
This refers to ‘FinMin swears by household sector strength amid rising borrowing trend’ (September 22). It’s difficult to predict the economic behaviour of households. The RBI should frame its monetary policy according to the situation. If there is a fall in savings of households, then the government can deposit a large percentage of its tax proceeds (forced savings) with the banks to fill in the deficiency. Be that as it may, one day we say there is recession and exhort people to spend their wherewithal. On some other day, we say, falling savings is a cause for concern in the economy. We cannot have the cake and eat it too. Let people live the way they love to. The government and the RBI should monitor their economic activities and take appropriate steps for the economy to be in equilibrium.
Canadian Prime Minister Justin Trudeau’s allegations that Indian agents are responsible for the killing of Hardeep Singh Nijjar, a Canadian citizen and a prominent Khalistan leader, without being backed by substantial evidence have put bilateral relations between the two countries on a downward spiral. Rather than make concerted efforts to dial down the tensions between the two countries, Trudeau appears to be engaging in toxic domestic politics by playing to the gallery of the extremist fringe of the Sikh diaspora. Khalistan supporters enjoy significant political clout in Canada and the Canadian government is treating them with kid gloves without being sensitive to the legitimate concerns of India about Khalistan separatists’ threat to its sovereignty.