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Rising interest rates accompanied by a rise in inflation is bad news for the banking industry. This will have a huge impact on PSBs and they may have to book huge losfs on account of revaluation of securities held in the Asset for Sale portfolio. Already facing the heat due to ballooning NPAs, this development is most unwelcome. After demonetisation banks were forced to invest in long-term securities to earn a steady income.
The NPAs of PSBs are expected to go up putting further pressure on the income of banks. With 10 banks already placed under Prompt Corrective Action framework leading to loss of deployment opportunities, the financial sector is passing through a critical period. Banks will be under increased pressure due to fall in capital adequacy ratio culminating in fall in ROA. With the extended timeline for full implementation of the Basel III capital regulations set for March 31, 2019, the Government has to hasten the process of capital infusion.
Srinivasan Velamur
Chennai
Merger is no solution but stricter management and compliance with rules, and administration with tight control with accountability is the need of the hour. Most banks have properties to cover required funds in theory which cannot be sold off. But if banks’ sale is offered with cent per cent safety and repayment of deposits, there will be many offers. Still banks with huge NPAs can be managed without merger, and safeguarding existing depositors and account holders. Professional management without any reservation and political considerations can revive ailing banks.
Mahesh Kumar
New Delhi
Medical blues
With reference to ‘A potential antidote’ by Shailaja Chandra (January 4), the Government did well to refer the National Medical Commission Bill 2017 to the standing committee of Parliament. This Bill, which aims to dissolve the Medical Council of India, has made doctors edgy.
We all know that the MCI has been mired in scandals lately. Therefore there is a lot which needs to be reformed in medical practice and education in India. However, the proposal to allow ayurveda and homoeopathy practitioners to prescribe allopathic medicines needs a rethink.
Bal Govind
Noida, Uttar Pradesh
Good suggestion
The demand that the Muslim Women (Protection of Rights on Marriage) or triple talaq Bill be referred to a select committee of Parliament merits serious consideration. We should not be oblivious to the fact that laws enacted by Parliament merit deeper and objective scrutiny along with a constructive debate over the provisions before it reaches the stage of implementation.
M Jeyram
Sholavandan, Tamil Nadu
2G and after
The acquittal of the accused in the 2G spectrum case because the prosecution failed to produce conclusive evidence, raises doubts regarding the credibility of the highest criminal investigating agency in presenting the case. Others may find fault with the judges. All this is because of the findings of the CAG that a loss of ₹1.76 lakh crore occurred to the exchequer as the authorities did not follow proper auction procedure.
We see that the CAG enters the field many years after the incident. Hence the numbers arrived at by the CAG,, the method it adopted to compute the perceived loss, and whether it was a scientific method, are all open to question.
If it is presumed that the assumption is not correct then how can the apex court cancel the licences of the bidders in the 2G spectrum case as well as in the coal blocks auction case? After all, the licences were cancelled based on the CAG’s report and its substantive evidence regarding notional loss. In such cases how can those bidders be compensated now for the loss they incurred in between? The point to be considered here is that proper follow-up of procedures and guidelines need to be adhered do. Any deviation will lead to such controversies, and that would make the public lose their faith in the judiciary, the CAG and the CBI.
TSN Rao
Bheemavaram, Andhra Pradesh
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