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This refers to ‘Govt gets it wrong on CRR’ ( Business Line , November 8). The Reserve Bank of India acts as a bankers’ bank and ensures stability of the entire monetary system. All banks enjoy the benefit of credibility due to regulation enforced by the RBI. Hence, they must pay for it. One way to measure the benefit derived can be by way of deposits mobilised by them. Hence, it is quite logical that they must forego interest on CRR, which is based on their deposit figures.
S Kalyanasundaram
Chennai
Govt wrong on CRR
This refers to “Govt gets it wrong on CRR” ( Business Line , November 8). The author has rightly pointed out that the government shouldn’t pressurise the RBI towards interest payment on CRR. Instead, the government, the RBI and banks should work towards reducing non-performing assets (NPAs) and other administrative charges, which constitute wastage. Reducing expenditure, wastage, is one way of earning profits. If the RBI takes interest on CRR, the ultimate financial burden is borne by the ordinary customers of banks. This is not a permanent solution.
The process for lending of loans should be strengthened, while also being user-friendly. Automation of processes across banks, in public and private sector, will reduce corruption. Promoting greater awareness amongst bank customers, and the public at large, will enhance efficiency.
Vedula Krishna
Visakhapatnam
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