Correct treatment

This refers to the reports on recapitalisation of PSBs (October 25). This is exactly what the doctor ordered to fix the balance sheet problem faced by corporates and state-owned banks. Had the plan been kicked off when NPAs surfaced, the slowdown in the economy could have been stemmed.

The recapitalisation package will shore up the tier-1 capital of banks as the Government will front-load the equity capital of banks with cash raised through the floating of recapitalisation bonds. The package is unlikely to increase the fiscal deficit as it is cash neutral.

Though the move will increase lending capacity the Government has to come out with structural and governance reforms. The slackening of credit growth is a problem that has deeper roots than it appears. This problem can be addressed only by easing lending norms to the SME sector which has borne the brunt of demonetisation and GST rollout.

Philip Sabu

Thrissur, Kerala

Banks need a stable top management, performance-oriented supervision and a culture of zero-malfeasance to clean up balance sheets and improve loan portfolios. Mergers promise standardised and cost-effective operations but the downside is reduced public accessibility to bank branches/ATMs and high staff turnover. To safeguard the financial inclusion plans of the Government; it is important to streamline the incoherent priorities of individual PSBs and ensure seamless integration of heterogeneous systems.

Girish Lalwani

Delhi

A former RBI deputy governor was quite pragmatic when he said this is no more than government lending money to PSBs, not capitalising them. The additional ₹76,000 crore through budgetary support and market raising that makes up the total of ₹2.11 lakh crore is likely direct capital infusion ; less than 10 per cent of the current NPAs at ₹8.21 lakh crore .

The Government intends to go in for progressive banking reforms that alone can make them profitable to first obviate bad loans and then service the piling debt burden. Budgetary props can do no more than prevent a collapse, not spurt resurgence and growth. Under the same stressed economy and lending environs a leading private bank has been giving sustained profits for years.

R Narayanan

Ghaziabad, Uttar Pradesh

Perceptive piece

‘Think global, act local’ by Arun Maira (October 25) makes good points. Advanced countries cannot continue living in the same style. Resource is the biggest concern and resource saving is extremely important. India must start working on building a robust infrastructure, sound industrial base and provide quality education supported by skill and training. Otherwise there is danger.

M Raghuram

Mumbai

The people want to know

The ‘clean chit’ given to Infosys’s acquisition of Panaya is a major setback to founder Narayana Murthy. But the fact that the investigation was only restricted to finding out whether it had led to any pecuniary benefits and issues related to conflict of interest with respect to the previous CEO, Vishal Sikka, only reveals one side of the story. The allegation related to payment of an unprecedented high severance package to the then CFO Bansal and the suppression of this fact by the board are still shrouded in mystery. Though publication of the entire report was rejected by the present chairman Nandan Nilekani citing ‘confidentiality’ issues, nevertheless shareholders and the public at large are entitled to know the merits of the case in its entirety.

Srinivasan Velamur

Chennai

Not much help

With reference to ‘Disquiet on the western front’ (From the Viewsroom, October 25) by Aditi Nigam, the EC may have misjudged the flood situation in Gujarat in delaying announcing the election dates. However, it is unlikely that announcing sops will help the ruling party significantly. Voters have become wise and even freebies fail to impress them.

YG Chouksey

Pune

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