Letters to the editor dated March 5, 2020

Apropos ‘Quick on the trigger’ (March 5). Globally, central banks seem to go by dated textbook monetary prescriptions than insights gathered from previous financial crises. They have been flitting from concerns over inflation to liquidity flooding and occasionally to exchange value correction.

Between the disruptions caused by US President Donald Trump to the now divine Covid-19, monetary policy worldwide has pivoted from tightening to easing, with the pace of rate cuts accelerating in 2018 as the US tried to reshape the global trading system in a way that threatened economic growth, disrupting cross-border supply chains, hurt business confidence and investment.

In contrast to 2018, when central banks raised interest rates, the third quarter of 2019 saw benchmark interest rates cut 67 times globally.

What is the use of such monetary interventions, that induce an unsteady flow of funds between economies when the flow of global trade itself is caught up in a vortex of uncertain spin and depth. Unified policy approaches tailored to the genre of disruption is needed.

Mumbai

This refers to ‘Avoid unconventional monetary policy’(March 5). While the inherent risks associated with the banking activities are unavoidable, a prudent banker, in order to grow business and earn profits, has to recognise the risks and execute appropriate ways to mitigate them. Non-performing assets are inevitable in lending and investment, but if if bankers abstain from taking decisions to avoid bad loans, it will adversely affect credit growth and the economy. Bankers must be protected from harassment during probes on their prudent decisions of funds’ deployment. It is imperative to instil confidence among the bankers to enable them to improve their risk-bearing capacity.

Despite the new methods executed by the RBI, the lending rate of the banks are high, which is unfavourable for enhancing investment. The banking regulator needs to look for more reduction in the prevailing repo rate and nudge the banks to pass on the reduction to the end-users to propel investment. The government must proceed against defaulters with stringent measures to realise the significant amount involved in these cases. Besides this, the RBI must consider giving some forbearance in the NPA norms to enable the bankers to restructure credit facilities .

Kottayam

This refers to ‘How to effectively run a public sector bank’ (March 5). In spite of the reformative actions initiated by PSBs through decentralisation of operations, delegation of more powers at the grassroots level and aggressive digitalisation of services, the banking business will not sustain in the absence of impeccable customer service. As rightly pointed out, without improving digital literacy of rural population, closing of rural branches and downsizing of ATMs will do more harm. There is a need to turn around governance standards in the banks to improve customer service. A new governance framework on staff accountability, management and best customer service may be a desired solution.

Bengaluru

This refers to the news report ‘PMJDY helps raise women’s ownership of bank accounts to 77 % in 2017: MSC’ (March 5). It is heartening to note that Jan Dhan accounts are reaching to wider network of women. The Pradhan Mantri Jan Dhan Yojana (PMJDY) must now become a high-priority programme spearheaded by ASHA workers, aganwadi workers and educational institutions. A very large part of the problem is that the operation of most of the female labour force, small businesses, and small entrepreneurs is in the informal economy. The answer lies in encouraging females to go for Pradhan Mantri Laghu Vyapari Maan-dhan Yojana for retailers and traders, the Pradhan Mantri Kisan Maan-Dhan Yojana (PM-KMY) and the pension scheme for women engaged in unorganised sectors. Only then will inactive bank accounts be put to proper use. Self help groups are one of the cornerstones of suitability and income generation in rural areas, and encouraging them to go for digital banking will boost the balances in Jan dhan accounts.

Vadodara

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