Auditor resignations

This refers to ‘Before auditors quit’ (July 23). Such has been the corporate governance and lack of financial integrity issues in companies that auditors prefer leaving the ship rather than trying to question promoters. And just imagine what would be the plight in non-listed companies, where a lot is dependent on the intention and integrity of promoters alone. It is really welcome that SEBI has woken up to this crisis and come out with a consultative paper. It is more than essential that the real reasons for resigning should come out in the open as all stakeholders’ interests are directly linked with those issues.

Noida

As is well known, July 23 is the day when Viral Acharya ends his stint in the RBI as one of its four Deputy Governors. It may be pertinent to recall that he has been a staunch opponent of the government’s astute game plan to conveniently ‘corner’ the RBI’s ‘reserves’ by administratively transgressing into its exclusive domain as the nation’s central bank. It is a different matter that the Bimal Jalan-led panel (constituted at the behest of the government) has already finalised its report for onward submission to the RBI Governor, who is understood to have played a key role in bridging some unprecedented wedge between the government and the RBI on this highly emotive issue, which virtually brought them on the same page. The only question that now remains is: When and how much?

Acharya’s landmark October 2018 speech, which virtually created a massive furore in the corridors of power in North Block, will be remembered for its well-meaning intent and purpose.

On his last working day at the RBI, one must thank him for his sincere efforts to preserve the autonomy of this great institution.

New Delhi

We paid the price for the Pokhran nuclear test in terms of being denied access to cryogenic tech. But this drove us to develop powerful engines on our own. The international scientific community today acknowledges our efforts in developing the technology on a shoe-string budget. What an enviable achievement by ISRO.

Navi Mumbai

This refers to the editorial ‘Welcome move’ (July 23). Discipline in financial and non-financial transactions is crucial to protect the interest of investors and lenders and in driving economic growth. This warrants efficient and error-free auditing. Negligent and corrupt auditors who overlook the frauds of the management and promoters must not escape punitive action. The market regulator must ensure strict discipline in the auditing profession.

Changanacherry, Kerala

Media reports indicate that RBI Governor Shaktikanta Das has taken banks to task for the high level of defaults in Mudra loans. Before lending, bankers are taught to consider the 3Cs in a borrower — character, capacity and capital. Capital includes collateral, which is an asset that a borrower offers to the lender as security for the loan. In the absence of collateral, even honest borrowers may be tempted to default on repayment. That the non-performing assets (NPAs) among Mudra loans have spiked is no surprise given the fact that these are collateral-free loans. The move to double the loan limit under the scheme from ₹10 lakh at present to ₹20 lakh will only put additional pressure on banks, especially PSBs, which are already hampered in ‘not having enough boots on the ground to monitor end-usage of loans, or recover those that have turned bad’.

In September 2018, the former RBI Governor, Raghuram Rajan, had suggested ‘a closer examination of Mudra loans and Kisan Credit Cards to prevent an NPA crisis in the future’. When the emphasis is on quantity of lending, quality is bound to suffer. After pressuring banks to lend under populist schemes, to blame them for high defaults therein is nothing but barking up the wrong tree.

Chennai

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