Letters

Letters to the editor dated Sept 23, 2020

| Updated on September 23, 2020 Published on September 23, 2020

Income inequality

This refers to ‘Time to abandon Friedman Doctrine?’ (September 23). The surging inequality in income distribution to capital and labour reflects the abnormal returns business enterprises are making at the cost of other partakers of the economy.

While profit is the price paid for undertaking the business risks, optimisation of the returns is crucial to attracting investment. The government’s role is to ensure the maintenance of law and order and, thereby, provide maximum welfare to the people.

Simultaneously, it is also necessary to prevent business enterprises from adopting unfair practices to maximise profits at the cost of the rights of the consumers. The market must be steered by the appetite and preferences of the customer.

A balanced approach from the government is vital to propel business activities without compromising the rights of the consumers, and an even distribution of income to the various factors of production.

VSK Pillai

Changanacherry, Kerala

No solution in sight

This refers to ‘PMC Bank: RBI says it is working to find a viable solution to revive bank’ (September 23).

It goes without saying that the much-sought-after revival of PMC Bank may take much longer than expected as the top management had a major role in the scam.

Now, most of the bank’s hapless depositors may face a double whammy — the bank must have deducted TDS and the depositors will also be required to pay additional tax (as applicable) even as there’s uncertainty about refund of their deposit monies.

What if they fail to get refund of their principal deposit amount itself? Cannot the government, as a special case, defer the recovery of the TDS amount till things are finally settled?

SK Gupta

New Delhi

 

Risk restructuring

Apropos ‘Restructuring risks for banks’ (September 22), in the case of home loans over ₹100 lakh, banks insist that the ‘loan to value ratio’ and ‘EMI to income ratio’ do not breach 75 per cent and 60 per cent, respectively, to ensure that the borrower has sufficient stake in the property and adequate income to service the loan.

The said thresholds are also safety measures against the loans turning into NPAs. However, banks do consider a higher LTV ratio, if ‘mortgage insurance’ is furnished.

But, in the present uncertain times, banks have to grin and bear it, if the said ratios climb up due to extraneous reasons, such as ‘restructuring or moratorium’, while hoping that the repayment becomes regular, post restructuring.

In the days to come, defaults may inevitably occur in home and other retail loans, due to job losses and pay cuts suffered by the borrowers.

As a result, banks, especially PSBs, face a bleak scenario of rising bad loans, which they can weather only with governmental assistance, in the form of capital infusion and full fledged support in their recovery efforts, post Covid-19.

V Jayaraman

Chennai

Farm Bill: Whom to trust?

The recently adopted Farm Bills in the Rajya Sabha, amidst hostile conduct by the law makers, gives the impression that the MPs have betrayed the people who voted them to power. When the PMFBY scheme was launched, some States, including Karnataka, rejected it outright and planned their own crop insurance scheme. But the decision was later reversed, with farmers becoming the scapegoats.

Even the e-NAM scheme launched in 2016 by the Centre, which initially met with stiff opposition, was subsequently adopted by several States even when few logistic issues were still to be addressed.

Similarly, most States, without even debating the Western Ghats Ecology Expert Panel report (WGEEP) by two expert teams, rejected it.

When the Government has stated in unequivocal terms about MSP as well as continuation APMC, too much of apprehension about it is uncalled for.

Rajiv N Magal

Halekere Village, Karnataka

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.

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Published on September 23, 2020
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