Banking on UPI

This refers to the editorial ‘Imperfect fit’ (April 13). In the name of innovation bringing all banking products gradually under the fold of UPI without assessing the merit and demerits of such a move would prove to be a recipe for disaster. No doubt various retail banking services offered through mobile apps are a boon to customers but extending the same to asset products like retail loans requires careful consideration.

Already, ‘virtual banking’ has become the new mantra eliminating the need for physical branches. Credit via UPI will further increase the wedge between banks and their customers. Retail credit is an intensively relationship-based business which involves understanding the creditworthiness of the customer and ongoing monitoring. Unsecured loans which is brought into the UPI fold are fraught with credit risks. With most of the government sponsored loan schemes facing poor recovery rates, the new UPI-backed loan scheme should not add to the burden of banks for want of close monitoring.

Srinivasan Velamur

Chennai

Spot stressed borrowers

This has reference to ‘Diagnosing the NPA cancer early’ (April 13). There are time-tested early-warning signals for banks which would reveal that all is not well for a borrower. Delay in honouring payment obligations, reduction in advance tax paid, accumulation of inventory, exodus of manpower and diversion of funds to unrelated activities are some symptoms available to bankers. The scrutiny of transactions in the operating accounts reveal a lot but unfortunately due to size and technology these data are scattered amongst many banks making a holistic study difficult.

Still the tools available are enough to make a rough assessment of the health of the borrower and a bank should be able downsize its exposure once the conduct causes concern. A healthy borrower would conduct all transactions in a timely manner.

M Raghuraman

Mumbai

Climate-resilient farming

Apropos ‘More funds needed for adaptation of farming to climate change’ (April 13), agriculture is the first sector to be affected by the impact of climate change, but the one that has received the least investment. With extreme weather events becoming common almost every year, farmers need to be aware of the crops to be grown and techniques to be adopted to save their crops in the changed circumstances. Unless there is extensive research on climate-resilient crops and methodologies, the agricultural scientists and the government cannot guide the farmers.

Hence, there is an urgent need to scale up the investment in R&D, especially by the various agricultural universities. In the meantime, farmers in vulnerable geographies may be advised to shift to millet farming, wherever they can be cultivated, as millets can withstand the extreme weather conditions better than many of the crops under the present cropping patterns and also requires less water.

Kosaraju Chandramouli

Hyderabad

Prevent food crisis

Erratic rainfall is causing havoc in several parts of country and the worst casualty seems to be the agricultural sector. The farmer is dependant on timely rainfall for his produce. The farming sector’s importance should be understood, else there may come a day when there will be no food on our table. Meanwhile, corrective action must be taken to halt climate change.

Melville X D’Souza

Mumbai

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