Letters to the editor dated August 7, 2020

This refers to the editorial ‘The right moves’ (August 7). The decision of the Monetary Policy Committee to maintain status quo on the policy rates and extend forbearance on the restructuring of loans to the MSME sector, appointing an expert committee to frame a window under the prudential norms for speedy resolutions of stressed loans, and raising the gold loan-to-value ratio to 90 per cent will pave the way for a robust rise in the quality and quantity of loans. Macroeconomic recovery is essential for the smooth growth of all the segments. While financial intermediation plays a key role in making financial resources available to all segments of the economy, it is imperative to sustain the banking system. The one-time restructuring of loans will thwart the growth of bad assets and thereby reduce the burden on credit costs of the lenders

While extending forbearance, it is imperative to be diligent and cautious to prevent good money turning unproductive and harmful to the whole economy. The diversion of funds disbursed by lenders is not rare and has been one of the main reason for the growth of loan-related frauds and NPAs. After the creation of fresh and/or restructured credit, the lenders have to be extra vigilant on the use of the funds, quality and value of the underlying assets, and the servicing of the repayment obligations.

Changanacherry

The RBI’s decisions on the monetary policy are very timely and helpful to the various sections of the economy, especially the industrial sector. The steps to improve liquidity are a welcome feature. Borrowers will be benefited by the restructuring plan. Repo rates have been left untouched, which means lending rates will remain the same. The various steps are in response to the situation created by the pandemic. It is also important to avoid any inflationary effects. It is very important that ‘priority status’ is given to loans extended to start-ups, as these will help in raising new industrial and commercial units.

Coimbatore

Apropos ‘RBI sets up panel under KV Kamath for one-time restructuring of loans’ (August 7). The RBI’s decision to provide a window under the June 7 “Prudential Framework on Resolution of Stressed Assets” to enable lenders to implement an astute resolution plan for eligible corporate exposures — without a change in ownership — as well as personal loans, is commendable. What else could explain its constituting an ‘expert committee’ under KV Kamath, which will make recommendations on the required financial parameters, along with sector-specific benchmark ranges, to be factored into resolution plans? In fact, all this came a bit late.

Notably, the RBI Governor, Shaktikanta Das, touched the right chords while echoing the impending plight of all genuine borrowers in the wake of disruptions caused by Covid-19, not just domestically but globally too.

The MPC also thought it wise to press pause on repo rate cuts. Needless to say, our sagging economy has to be put on a much-needed growth-oriented path, for which the borrowers, the RBI, banks and the Centre must act with determination and in unison.

Bengaluru

This is with reference to ‘ Unlock the Valley’ (August 7). The Kashmir problem cannot be solved with an iron fist, but rather with sensitivity. The people of Jammu and Kashmir have suffered enough. All possible aid should be provided to them by all the States.

With development, economic growth, peace and prosperity Kashmir will beat all other tourist destinations because of its beauty and grandeur. With good governance, peace and stability, and improved infrastructure

Kashmir should be transformed into a world-class tourist destination. Establishing good colleges and other technical institutes will help the Kashmiri youth compete equally with the rest of the nation. By setting up good medical colleges and hospitals, the public health needs can be taken care of. The list is long and requires minute attention from both the Centre and the States.

Thane

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