Letters to the editor dated September 9, 2020

This refers to ‘Is interest waiver on moratorium fair?’ (September 9). In the current scenario, banks are under threat from the inevitable rise in stressed and bad assets as well as of the related cost on the loan losses.

Besides, banks have to ensure the transmission of the effect of the monetary policy rate cuts to the end-beneficiaries of the economy through a similar reduction in the lending rate. As such, to control the cost of funds, banks are under pressure to reduce the interest rates on deposits and ultimately the stooges are the depositors who are contributing the resources to the bank.

The moratorium on the payback of loan instalment and interest has been allowed to the borrowers to ease repayments in consonance with the generation of cash flows. Waiving the interest is not financially feasible and it is against prudent banking practice. Recovering interest on loans and on the defaulted interest is essential to compensate the time value of money and, thereby, sustain the profitability, creditworthiness and credibility of the lenders. The government must stick to that.

Changanacherry

When it comes to waiving interest, one must say that whatever interest had accumulated during the moratorium period on the deferred EMIs needs to be paid. At the same time, it would be logical to expect waiver on interest on interest accrued. Banks arguing against interest waiver need to answer a question.

What about funds locked in NPAs to the tune of ₹7.27-lakh crore? Most of them have been, or are in the process of, getting written off. Here, both interest and principal are at risk of being lost. Who should be held accountable for this mismanagement?

Further, in this case, is it fair for PSBs to get government support in terms of capital infusion out of taxpayers’ money for their survival? Banks cannot be choosy and project themselves as epitome of virtue when it comes to the issue of collecting interest on funds under moratorium.

Chennai

Apropos ‘Prudent framework’ (September 9), the KV Kamath-led committee’s sector-specific, rather than one-size-fits-all, approach needs to be commended. While coming out with various financial ratios for each of these sectors, it has taken into account that past errors of lenders do not occur again. For an overall and balanced revival, the issues of each stakeholder in the whole supply chain have to be resolved.

The idea of an ongoing committee, which on a regular interval can guide banks to course correct, would be helpful.

Noida

This is with reference to ‘No safety shortcuts for Covid vaccine’ (September 9). Vaccine makers around the world should no doubt work with a sense of urgency to tackle the pandemic crisis. However, safety and efficacy of the vaccine should be paramount and all standard protocols need to be duly followed. Vaccine makers should ensure that their communications on the status of vaccine trials are fact-based and the same need to be widely disseminated by the media agencies.

Chennai

This refers to ‘Postpone BPCL, Air India stake sales’ (September 9). Disinvestment of PSUs will unlock tremendous value by way of enhanced professionalism, new global markets, maximising value to shareholders, access to advanced technologies, and so on.

It will create a level-playing field between public and private players and lessen the monopoly of public companies and, thereby, make the market competitive.

Companies like BPCL are doing fairly well, but in a protected environment with no competition. As for Air India, it is devouring taxpayers’ money and its disinvestment will benefit the government. As the world is moving towards non-conventional sources of energy, the future of the oil sector is bleak. Hence, the divestment of BPCL should be fast-forwarded.

Chennai

LETTERS TO THE EDITOR Send your letters by email to bleditor@thehindu.co.in Letters to the editor dated September 8, 2020 or by post to ‘Letters to the Editor’, The Hindu Business Line, Kasturi Buildings, 859-860, Anna Salai, Chennai 600002.

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