Letters to the editor dated Oct 21

| Updated on October 22, 2019

Resolving bad loans

This has reference to the editorial ‘Saving the IBC’ (October 21). The twists and turns in the resolution process of Bhushan Power and Steel, no doubt, poignantly reflect the labyrinthine ways of our legal system. However, before putting the ED in the dock one needs to be tempered by a larger issue involved. The premise that an asset, the acquisition and management of which involved some legal infringement, once transferred, should remain beyond the reach of law enforcement agencies in the name of well-being of the economy is fraught with moral hazard and may encourage defaulters to deliberately transfer assets before arms of law or creditors catch up with them.

Exasperation over delay should not blind one to the potential negative fallouts.

Manohar Alembath


Recovery of NPAs

Public sector and scheduled commercial banks are reeling under high volume of NPAs (non-performing assets) and after experimenting with different schemes like CDR, S4A, etc., the IBC was found to be the effective route for recovery of delinquent loans, though with some delay.

At this juncture, it is unfortunate that the statutory agencies like NCLAT and the Enforcement Directorate are entering into a tussle to claim properties owned by Bhushan Power and Steel which may ultimately delay the recovery process.

When the issue for distribution of assets between financial and operational creditors has barely been settled, the fresh controversy raising its head now is bound to further affect the recovery process. The Enforcement Directorate primarily deals with two laws — the Foreign Exchange Management Act and the Prevention of Money Laundering Act — which are primarily specific to individuals. On the other hand, banks being secured creditors have wider claim against the properties of the defaulting firms. As such the chairman of NCLAT is right in his assessment. The fulcrum for rekindling economic growth through credit revival lies in speedy recovery of NPAs.

As such it is imperative and inevitable that the agencies involved understand the problems and predicaments and work towards a common goal which helps in the revival of the economy.

Srinivasan Velamur


Monetary policy

Apropos ‘The ‘beggar thy neighbour' policy contagion’ (October 21). Indeed the adoption of unconventional monetary policy by developed countries is resulting in low rates of interest. It may increase liquidity but there will be a mismatch between savings and investment and, correspondingly, there will be no increase in production and employment and the liquidity trap that follows with slowdown.

Nevertheless, there are structural problems that are causing supply shocks and stagflation. The tariff war between major powers is increasing the cost of goods. The ‘beggar thy neighbour’ policy is affecting developing economies like India. The global slowdown is caused by not only a lack of demand but also supply shocks.

NR Nagarjan


Single-use plastic

This refers to ‘Banning single-use plastic’ (October 21). Though the government has postponed the ban on single-use plastic till 2022, it is a clear case of not thinking deeply before announcing a big decision like that. Given that as much as 50 per cent of our plastic waste remains uncollected or littered, the government cannot put the the issue on the back-burner for long. Multiple industries will be directly benefited from this decision as bags made of jute, cloth or paper would gain currency. What is critical here is the clear message to small-scale industries and people in general on which all products will be allowed to be carried in plastic and which ones will not.

Without any doubt promoting alternative eco-friendly packaging materials/products will provide a huge boost to local artisans across the country. As responsible citizens we need to change our behaviour gradually for the larger interest of the environment and society.

Bal Govind


Published on October 21, 2019

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