Apropos the editorial ‘Transparent scoring’ (November 2), the steps taken by RBI to regulate the functioning of credit information companies (CICs) is a move in the right direction. By and large though these CICs are into collection of data , there is an inordinate delay in updating the credit profiles of borrowers, leading to a delay or decline in their loan requests by financial institutions. Specifically, it has an adverse impact on borrowers applying for retail loans and credit cards where banks majorly rely on credit scores assigned by CICs for assessing the creditworthiness of borrowers. The analysis resorted to by these agencies for arriving at the final rating is completely shrouded in mystery, casting an element of doubt on the data CICs relied upon for arriving at the final scores. The new circulars issued by the RBI to make information sharing more transparent and tilted towards borrowers is a welcome move. This will not only help the borrowers to ascertain the genuineness of data relied upon by these CICs to arrive at the final rating but also for banks to charge interest based on realistic credit background.
This refers to ‘Banks need to lend cautiously’ (November 2). Since asset-liability management is critical to mitigate various risks and optimise returns, it is imperative to avoid aggressive lending practices. The growth in personal loans which are mostly unsecured needs to be reduced and banks should deploy more funds into manufacturing, particularly in MSMEs and agriculture, to resolve the persisting employment crisis and to nudge the growth of the rural economy.
As a major chunk of resources to lend comes via deposits, aggressive deposit mobilisation is essential, particularly of retail deposits, to minimise the cost of funds.
Also, banks must desist from lending without obtaining quality collateral. .
It is good to see GST collections touch ₹1.72-lakh crore for October, a 13 per cent growth over last year and second highest in terms of absolute value. With the festival season continuing over the next two months, the collections could reach a new high. The healthy mop-up is also due to the aggressive drive against evasion. The compulsory e-invoicing for annual turnover of more than ₹5 crore should also help in reducing evasion.
Apropos ‘Schooled in technology’ (November 2), the pioneering transformation the Shiksha Setu app is bringing to the school education system in Assam is commendable. With real-time monitoring of various school activities — from student and teacher attendance to teacher retirement — the app is bound to improve the management of schools. The app is worthy of being adopted by other States. However, adoption of technology can only transform the education system to a certain extent.
While the curriculum needs to be updated with changing times on a continuous basis, teachers also need to be trained periodically to improve teaching standards. Schools should not only educate and aim to make students successful in respect of their future, but also inculcate values and ethics and develop moral character to make them good citizens.