Letters to the editor dated March 9, 2020

The refers to the editorial ‘Yes and no’ (March 9). The embezzlement and financial crisis that occurred in the private sector lender YES Bank have inflicted heavy monetary and non-monetary damage on depositors and investors, besides affecting various other players in the financial system. The incident shows that despite the on-site and off-site oversight of the regulators and the government, the interests of the stakeholders are at risk. In contravention of the norms of the banking regulator, the private sector lender deployed public funds for the benefit of some business entities who are otherwise ineligible to borrow money from a financial institution.

Although the present action of the RBI gives some respite to the depositors, yet it is not enough to regain the lost confidence of the customers not only on the particular institution but also on the similar institutions. At a time when the financial system is struggling to contribute to the revival of the economy on account of the impact of coronavirus and the still elevated NPAs, embezzlements such as these only add the woes afflicting the economy.

The government and the regulators have to review the adequacy and strength of their extant systems to prevent such misuse of public funds by the promoters and management of private sector lenders.

Kottayam

The quick bailout package for YES Bank being orchestrated by the Finance Ministry and the RBI for controlling the damage to public confidence caused by the collapse of the fourth largest private sector bank in the country has invited widespread criticism, presumably because of SBI being used as a shock absorber. The comment by the former AG Bishwajit Bhattacharyya that ‘profits are privatised while losses are nationalised’ is to be seen from this perspective. SBI’s proposal of purchasing 49 per cent of the equity of YES Bank is viewed as the first step in the takeover of the collapsing bank in the coming days. The whopping amount of stressed assets of YES Bank is expected to add to the worries of SBI once the proposal gets through.

Thiruvananthapuram

The article ‘YES, public sector banks aren’t bad at all’ (March 9) could not have been better timed to remind the “enlightened lot” that ultimately corporate governance only matters and not whether the institution is public or private. Neither the independent nor the stakeholder directors had demonstrated through their actions that the financial institutions were ever board driven, in the episodes leading to the breakdown of IL&FS, DHFL, PMC and YES Bank. Even today, the agenda prepared by the MD and CEO and his/her management is only approved by the board. Creation of the post of non-executive chairman has also not changed the situation.

Unfortunately, both the regulators, SEBI and RBI, did not appear to have critically analysed the corporate governance practices of the boards in their inspection reports, even when the period under review is marked by exponential growth in high risk asset portfolio, much higher than the industry average. The rating agencies were also conspicuously silent on the regulatory concerns in their rating rationale.

Coimbatore

This refers to ‘Women as job drivers’ (March 9). For women empowerment, it is important to create enablers to provide capability and integration of formal and informal networks by bouncing economic growth ideas based on the supply chain across the nation.

Self-help groups are time tested job drivers which have ensured women stand on their feet and participate in activities such as detergent powder and soap-making, dairy farming, handicraft, piggery, poultry, and cultivation of ginger, turmeric, banana and other crops.

Equipped with Jan-Dhan accounts, mobile, Aadhaar, and accident/life insurance and pension cover, they are well placed to strike it on their own. It would be remunerative and beneficial to explore innovate and digitised self-help groups too.

Vadodara

LETTERS TO THE EDITOR Send your letters by email to bleditor@thehindu.co.in or by post to ‘Letters to the Editor’, The Hindu Business Line, Kasturi Buildings, 859-860, Anna Salai, Chennai 600002.