Letters

Interest rates

| Updated on September 20, 2019 Published on September 20, 2019

 

This refers to the editorial ‘Caution pays’ (September 20). Liberalised credit delivery to propel the decelerating economic activities warrants strict oversight from the banking regulator to prevent the growth of non-performing assets. While the economy is slowing, cash generation from economic activities will get negatively impacted and, therefore, the creation and delivery of credit on easy terms with a price linked to the monetary policy rate is critical. The banking regulator must push all the banks and NBFCs to adhere to linking their interest rates to the repo rate.

Easing the availability of liquidity with control on inflation is crucial to induce consumption and demand for goods and services. At this juncture, the banking regulator needs to ensure that the financial intermediaries are functioning as drivers of growth to secure the smooth revival of the economy. The cautious approach of the RBI when compared to other central banks is imperative to maintain financial discipline.

VSK Pillai

Kottayam

Independent directors’ role

Apropos ‘How to get truly independent Directors’ (September 20). Focus should be more on the fitment of a person to act as a truly independent director, than appointment by any regulator — MCA, RBI or SEBI.

A person’s credentials should be thoroughly vetted via a proper background check, before his/her name is nominated as an independent director.

Independence is purely a state of mind, and it is hard to predict personal behaviour in a particular situation or under specific circumstances.

So long as an independent director exercises loyalty and care to champion the cause of such an appointment and has not put to risk any wrongdoing that impacts the interest or image of the appointed entity, his risk is zero.

What is needed is knowledge of the art of negotiation, moral courage and die-hard conviction to justify the stand taken and thereby safeguard the reputation of such entity.

Hanseswar Ghosh

Gurugram

Planned initiative

This refers to the news report ‘FM opens the liquidity tap for Bharat’ (September 20). The FM’s initiative is well-planned, since the approaching festival season would demand liquidity.

It is also a good step to provide funds for the retail, housing, agriculture and MSME sectors to remove problems in liquidity and raise consumption. The step would also raise credit outgo, increase production and prevent the economy from sliding further. A further step would have been for boosting personal loans, since the festival season demands liquidity across the population which will also step up consumption.

TR Anandan

Coimbatore

Credit measures

This refers to the report ‘FM opens the liquidity tap for Bharat’ (September 20). Representing the majority stakeholder of PSBs, the Finance Minister is duty-bound to give directions to the banks with regard to the priorities which should guide them while allocating credit. But the way in which expectations from the banking system were announced by Nirmala Sitharaman is reminiscent of the ‘loan mela’ days of last century.

The Indian banking system has the resources to provide adequate need-based credit to all sectors contributing to the country’s economic growth. There is a need to remove the fear instilled following recent developments emanating from the rise in NPAs and measures initiated to bring stressed assets of banks under control. The idea of banks interacting with prospective borrowers or popularising loan products is not bad in itself.

Actually, before technology got an upper hand over human interaction, branch managers used to keep a day in a week/fortnight free to listen to their clientèle.

While adding new loan business has to be part of the growth process, perhaps, the proposed district-wise shamiana-like meetings should give priority to processing loan applications received by banks prior to September 19 for obvious reasons.

MG Warrier

Mumbai

Published on September 20, 2019
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