Letters to the Editor dated March 13, 2020

The appeal of Reserve Bank of India to State governments not to shift deposits from private banks is strange indeed (‘YES Bank effect’, March 13). Banks themselves exhort their field functionaries to focus on public deposits, rather than on those from institutions, in view of the volatility involved and the strings attached to the latter.

Yet, banks find institutional deposits irresistible, in that a single deposit mobilised for a huge amount has the potential to boost their liabilities, with the proportionate increase in lending. Conversely, closure of such big-ticket deposits may play havoc with a bank’s health, causing serious asset-liability mismatches.

However, from the depositors’ (public or institutional) perspective, safety and liquidity of the investments are of paramount importance. Further, no depositor can permanently maintain deposits with a bank. As such, the RBI should take steps to tighten its own supervision of banks, thereby strengthening public confidence, instead of issuing such irrational appeals.

Chennai

YES Bank by all accounts was an ambitious entity that dreamed big and believed in speed. No wonder in a little over 15 years of its birth in 2004, it became the fourth largest private bank with total assets over ₹4 lakh crore whereas a nationalised bank like Indian Bank could reach this figure only after around 70 years.

There was something surreal about the functioning of the bank. It defies logic how a bank which disclosed capital adequacy of 16.5 per cent and gross NPA of 3.22 per cent as of March 2019 could fail in less than 12 months. If we analyse what went wrong with the bank, weak corporate governance and dysfunctional boards apart, there was the lack of political will to clean up the mess that was created by long years of corrupt nexus between politicians, promoters and bankers.

One cannot understand the policy of the government that whenever a crisis occurs it looks to the public sector to clean up the mess. The largest bank, SBI, has been asked to rescue YES Bank, though on its own it may not have come forward. Whatever be the plan, it’s going to be quite stressful for the entire banking sector.

Bheemavaram, AP

This refers to ‘Congress blames BJP for M.P. crisis, BJP demands floor test on March 16’ (March 13).The extant political crisis in Madhya Pradesh succinctly reminds us of the political melodrama that had similarly unfolded last year in Karnataka.

The Congress party’s top brass was no doubt taken aback at the decision of the junior Scindia to resign from the party. For sure, such a far reaching yet a wilful action could not have been a hasty one and must have its roots in this party’s internal bickering.

As regards the BJP demanding that the Kamal Nath government should seek a trust motion in the Assembly on March 16, it seems to kill two birds with one stone. Firstly, the State’s Budget session begins on the same date and, secondly, the BJP could be much better placed (numerically) now.

Panchkula, Haryana

This is with reference to the report ‘Never aspired to become CM: Rajnikanth’ (March 13).

Rajinikanth is a legend of Indian cinema. No other actor has enjoyed as much publicity and fame as he has. People, especially down South, not only adore Rajinikanth the film hero but also Rajinikanth the human being. Rarely does an actor command such fan following as he does.

The superstar is right when he says more youth should join politics. The youth of today are not interested in religion or caste based politics. They want decent jobs, infrastructure, economic growth and prosperity.

Politics, which hitherto has been seen as a tool to make a quick fortune, should change with the infusion of fresh blood into the system. Rajinikanth should take a lead in this direction and guide the youth of the nation to usher in a new era in the Indian political system.

Thane

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