Headstrong

The Madras High Court’s decision to make helmets mandatory from July 1 is a welcome move. But the problem is even if wearing a helmet is made compulsory, people buy cheap quality helmets which defeats the purpose. Also, many youngsters hang their helmets on their rear view mirrors as if the mirror needs protection. One has to realise that one instance of rash driving or negligence can prove fatal, leaving behind grieving families, friends and relatives. Also, riders should desist from speaking on mobile phones while riding.

TS Karthik

Chennai

Food facts

This refers to the article, ‘Nestlé just forgot about its market’ by Siddharth Shekhar Singh (June 9). Nestlé was very slow in its response to the current crisis. It should have recalled the product from the market and should have given a clear explanation for the presence of excess lead in the noodles.Just because children enjoy noodles we cannot expose them to the preservatives, excess salt and low nutritional values in packaged foods. Packaged foods and fast foods get their taste from excess salt, sugar and fat. The only good thing is that we are having a debate about packaged food and people realise they should feed themselves and their kids with nutritious food and not fun food.

CR Arun

Email

Strategic move

This refers to the news item, ‘RBI empowers banks to take control of debt-stressed firms’ (June 9). Strategic debt restructuring bestowing the right on lending banks to acquire 51 per cent of shares of borrower companies failing on the terms of corporate debt restructuring is a very bold move from the RBI. This will put an end to the promoters of borrower companies fooling banks and getting away with repayment terms, and luring banks to one-time settlements. By introducing SDRs, the NPAs of banks also should come down drastically. At the same time, the responsibility on banks will also increase as the divesting equity stake of the company and sale of the same to a strategic investor will take some time; meanwhile, the bank will be virtually in charge of running the company.

Rugmani Vinod

Thiruvananthapuram

Banks, particularly PSBs where NPAs are on the rise, are saddled with a huge workload — Aadhar linkages, direct benefit scheme, financial inclusion, Jan Dhan Yojana. They do not have the staff and administrative support to manage the affairs of debt stressed firms. Therefore, banks should utilise the services of ex-bankers, retired professionals, lawyers, and others to leverage action on the recovery measures of sticky loans. Managing firms should be left to others; bank employees have other pressing priorities.

RS Raghavan

Bengaluru

The new RBI guidelines on recasting of debts by conversion into equity are well conceived and timely. They will facilitate the takeover of management by lenders in case of failure of restructuring and hence indirectly help in the recovery mechanism.

As the equity conversion option is triggered by failure of first restructuring, the promoters are expected to be more serious in revival lest their companies go out of their hands. Also, conversion of part of the debt into equity will reduce stress on companies and reduce the NPAs of banks. However, there are some concerns and these require careful handling.

Firstly, it may lead to misuse and may be used as an exit route by promoters. Secondly, the lenders may find it difficult to offload holdings if the company has inherent weaknesses or the market is not ripe for such divestment and ultimately end up holding equity instead of debt. The problem is likely to be more severe in case of unlisted companies. Further, the interim between conversion of debt to equity and its divestment the management of the company will be the responsibility of lenders for which they have limited bandwidth. Even if they employ professional managers success may be uncertain as there could be many technical, labour and other issues which make managing a beleaguered company difficult.

M Raghuraman

Mumbai

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