Cautious banks

This refers to ‘Banking blues’ (December 27). The increasing number and amount of frauds for 2019, of which a major chunk pertains to loans and advances, is making banks risk-averse. Since this is badly affecting the flow of funds to the core sectors, the confidence level of banks needs boosting. Authorities who the investigate a decision relating to credit and fix blame without the proper application of mind hurt the progress of the bank. The risk-bearing capacity of the banks, especially that of the public sector banks, needs to be nurtured.

The decline in gross NPAs from 11.2 per cent in 2017-18 to 9.1 per cent in 2018-19 is definitely a respite to the banking sector; however, the possibility of a major slippage of assets outstanding under the Special Mention Accounts 1and 2 can’t be ruled out, given the persisting let-up in the economy. Excess supply of credit to the retail sector beyond the credit absorption and repayment capacity of retail segments will increase defaults due to lowered wages and job losses. Mere capital infusion in public sector banks without rejuvenating the interconnected and interdependent segments of the economy is meaningless, as the sluggish demand for credit from the core sectors is adversely affecting the profitability of the banking system.

VSK Pillai

Kottayam

BJP’s loss

This refers to ‘Why BJP lost Jharkhand’ (December 27). The BJP needs to understand that State elections are a different ballgame, and cannot be a referendum on the Centre or Prime Minister Narendra Modi. At Centre, the BJP may not need allies, but the definitely do at State elections — Maharashtra is a great example of this. In Jharkhand, the JMM won 26 of the 28 seats reserved for STs, and the BJP fared poorly in rural areas. This proves that issues like poverty and unemployment did matter to voters, and it’s high time the BJP learn from this defeat and rethink its policies and priorities.

Merely following and aping Amit Shah or Modi will not fetch the desired results for regional leaders. Forming a real connection at the grassroots level is key. If the AJSU and the BJP had stood together, the results could have been different.

Bal Govind

Noida

Credit ratings

This refers to ‘SEBI slaps ₹25-lakh fine on ICRA, CARE for ‘failure, laxity’ in IL&FS case’ (Decmeber 27).

Ratings agencies are relied upon by retail investors to decide on investments. The issuers also tout their rating while selling these products in the market. But off late, retail investors have started losing trust in the ratings.

The failure of firms with high-rated products should be investigated by credit rating firms to revise their methodology. Also, ratings agencies should share more specifics of why a certain rating was assigned. They also need to run consumer-awareness sessions to make sure investors understand the interpretation behind a rating.

Currently, a firm has to choose the credit ratings agency it wants to go with, and this itself is a conflict of interest and may lead to bias. A mechanism can be designed where multiple agencies rate a product and all the ratings can be published.

Retail investors are in a fix, as now there is no simpler way to assess quality of an instrument. In this confusion, retail investors may go back to safe havens and traditional products for investing, thus contributing to the vicious cycle of slow investment, slow growth.

Neeti Gupta

Bengaluru

Controversial statement

This refers to the unnecessary criticism by Opposition parties on thestatement of Army Chief General Vipin Rawat, wherein he has questioned the violence in university campuses during protests. There is no politics in the statement.

The statement of the Army Chief is also based on practical aspects, as at times, the Army has to be called to control escalated situations. The Army Chief, like all other citizens, is pained on large-scale damage incurred during incidents of violence.

Subhash Chandra Agrawal

Delhi

Published on December 27, 2019