Letters

Bank deposit rates

| Updated on July 30, 2019 Published on July 30, 2019

This refers to ‘SBI plans to trim rates on retail domestic term deposits by 5-75 bps’ (July 30). The rising provision coverage for bad loans, the dismal progress in the recovery of bad loans and prudentially written-off loans, deep haircuts banks are incurring during the resolution of bad assets, and the losses arising out of frauds are also escalating the cost of funds of the banks.

The growing cost of funds is forcing banks to cut down the interest rates on deposits. However, rather than cut down the rate of interest on retail deposits, banks need to look for alternative ways to bring down the cost of funds. In fact, the burden of the rising cost of credit is being borne by the depositors.

As the rate of interest is the price paid to depositors for parting with the funds it needs to be competitive to not only attract the new depositors but also to retain the existing customers. Lowering the rate of interest is a disincentive to the depositors, and as such will negatively impact the growth of the resources of the banks, more particularly at a time when banks are recording sluggish growth in the deposits.

VSK Pillai

Changanacherry

Telcos’ woes

This refers to the report on the proposal to merge MTNL with BSNL. One wonders why both these public sector units are facing huge losses. MTNL and BSNL operate in metros and other cities where any hike in charges would not have met with any serious resistance from subscribers. There’s need, therefore, for a detailed study to find solutions to the problems facing the companies.

TR Anandan

Coimbatore

Demonetisation revisited

Three years have gone by since demonetisation was introduced in 2016, and it’s time to look at its impact in the financial arena. Have the government’s goals of curbing black money and counterfeit notes been achieved. Definitely not. But the government has been boasting that demonetisation has helped usher in a cashless economy. But the fact is even today people prefer cash payments to digital for various reasons. It is true that ATM usage has increased, but that’s mostly in urban areas. A study has found that demand for cash is higher in States with a high population density.

TSN Rao

Bheemavaram, AP

Invest in India?

It is prudent to align the varied capital-market regulations with the larger economic goals and utilise the well-acclaimed political goodwill to boost business sentiment. To generate sustainable revenue growth and ensure compliance with tax norms, it is important to optimise interest rates, to not only promote retail participation across market segments but also to curb inflationary pressures and channel long-term foreign investments. Diktats aimed to enhance transparency/disclosures are paramount to socio-economic growth.

Lender-friendly IBC norms ought to consider aspects of business continuity and CSR initiatives, to surmount insolvency-risks and serve the interests of vendors, employees and shareholders. Frequent amendments to the laws can affect standardisation, robustness and investor sentiment. Allowing promoters/guarantors to regain control of the firm within a stipulated time-period could defeat the very purpose of the law, devised to prevent back-door entry of dubious owners and curb instances of wilful default.

Girish Lalwani

New Delhi

Curb deforestation

As per the results of the fourth cycle of All India Tiger Estimation 2018, the tiger population has increased by 33 per cent to 2,967 in 2018 from 2,226 in 2014. Reports say that the tiger population has been growing at an annual rate of 6 per cent. While this is welcome, of concern is the fact that the big cats and other wild animals are straying into human habitats, thanks to continued deforestation. Encroachment of forestland by unscrupulous elements has gone unchallenged. Before taking steps towards afforestation, the government should conserve the existing forests and take back the encroached lands.

KV Seetharamaiah

Hassan, Karnataka

 

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Published on July 30, 2019
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