Retail loan recovery
This refers to ‘Banks selling retail loan a/cs showing signs of stress to ARCs’ (March 31). Retail loans, being predominantly unsecured, offer limited recovery avenues through mechanisms like SARFAESI and DRT. The increasing trend of offloading both retail and corporate loans to ARCs at an early stage of becoming NPAs is concerning, as it often results in poor recovery — particularly for retail loans, where Security Receipts (SRs) account for around 85 per cent. Given that banks hold approximately a 51 per cent stake in the National Asset Reconstruction Company Ltd (NARCL), weak recoveries by ARCs will indirectly impact banks’ performance.
The recent RBI guideline permitting public sector banks to book profits on SRs upon a 100 per cent write-off in their books exacerbates the issue. This approach risks creating an illusion of financial strength, as actual recoveries from unsecured loans transferred to ARCs typically range between 8-12 per cent. Moreover, the significant haircuts applied before transferring loans further obscure the true extent of NPAs.
Srinivasan Velamur
Chennai
Pulses production
Apropos ‘Preparing the ground for self-sufficiency in pulses’ (March 31), indeed achieving self-sufficiency in pulses is a crucial goal for India, especially to cut reliance on imports. Bringing more acres under pulses crop with commensurate irrigation facility and ensuring Minimum Support Price will motivate farmers to engage in pulses cultivation. Coordination among farmers, the government and marketing agencies will revolutionise the pulses market
NR Nagarajan
Sivakasi, TN
Power tariffs
This refers to ‘GoM on Discom health suggests linking tariffs to annual inflation’ (March 31). One may recall the tariffs during the introduction mobile telephony around 1995. If those tariffs had been linked to inflation, mobile telephony would have been out of reach of most people by now. Technology and reforms in the sector have brought down tariffs substantially. Similarly, the power sector needs reforms and must embrace renewable energy. Then, like in some countries, power tariffs can be near zero at least during some periods of the day.
V Vijaykumar
Pune
Jan Dhan accounts
This refers to ‘Jan Dhan ends FY25 on a high note’ (March 31). The beneficiaries of the scheme need to understand the importance of digital systems in operating their accounts, to enable them derive optimum benefits from the scheme.
The large number of inoperative accounts indicates that a section of the beneficiaries still lack financial and digital literacy.
Banks at the branch must take corrective measures to convert them to active accounts to ensure the fulfilment of the objectives of the scheme. The government and the banking regulator must pay more attention to address the limitations being encountered by the beneficiaries.
VSK Pillai
Changanacherry, Kerala