Letters to the editor dated October 14, 2020

SEBI is right in shielding retail investors from the Additional Tier-1 bonds issued by banks; ‘caveat emptor’ notwithstanding (October 14). YES Bank had sold its AT-1 bonds to retail investors as ‘Super Fixed Deposits’, citing their higher interest rate, without highlighting the risks involved therein. Finally, when the bank, with the RBI’s approval, wrote down its entire AT-1 bonds worth ₹8,415 crore in March 2020, several retail and institutional investors, including mutual funds, burnt their fingers.

SEBI has now introduced restrictions that ‘banks can issue the AT-1 bonds only to qualified institutional buyers, on electronic platform, for a minimum allotment and trading lot size of ₹1 crore, with explicit disclosures’. As a result, banks would not have it easy, selling the bonds to shore up their capital, following the Covid-related provisioning on NPAs and to meet the Basel III requirements. However public sector banks, in view of their ownership, may still find sufficient patronage for their bonds, from institutional investors.

Chennai

The restriction of access to small investors to invest in AT-1 bonds may not hurt banks much, as the holding of these bonds are small in percentage terms. Bond investment is generally done by small investors who are risk averse and expect a steady stream of income.

These bonds are rated by credit rating agencies but the rating agencies do not upgrade/downgrade these bonds based on the current financial position of the banks to take an informed view about holding the bonds by retail investors. Awareness should be created among small investors through financial education. It is important to deepen and broaden the corporate bond market.

Nagercoil, TN

This is with reference to the ‘Forget it, but how?’ (October 14). “Forget it and move on” is easier said than done. People who have undergone the post-pandemic trauma of having lost a loved one or jobs/savings, and of being confined to their homes totally in small living spaces will never say “forget it and move on”.

Many patients with life-threatening diseases postpone treatment fearing they may contract the virus on visiting the hospital. Also, there are scores of elderly people staying away from their children undergoing depression on account of lack of physical meetings/help, and financial issues. The post-Covid era is definitely going to see a surge in mental disorders among people.

Thane

Apropos ‘3:1, LTC plan won’t go far’ (October 14), the LTC scheme for government employees is the product of a cunning politician’s mind rather than of a welfare economist. It directs the employee to spend his entitled money in a specified manner giving him no discretion — he should spend the sum plus twice more; and the expenditure should be in digital form for buying of highly taxed goods and services. It overlooks low-paid employees who would have no extra money to buy what the government wants them to. The scheme is opportunistic, aimed at exploiting the tendency of people to make high-value purchases during festival season.

The government would have appeared citizen-friendly if the scheme was confined to spending the entitled sum, and reimbursed if digitally spent and subject to proof otherwise.

Pune

This refers to ‘Lumpy skin disease nightmare for dairy farmers’ (October 14). This is a serious matter, particularly in the wake of non-availability of timely veterinary services at the doorsteps of rural farmers. The ‘Pashu Sanjeevini’ mobile healthcare scheme introduced in 15 districts of Karnataka in August this year is yet to take off.

The authorities must take cattle health seriously, else it may affect both the quality and quantity of milk produced. This, in turn, could affect the livelihood of dairy farmers

Halekere Village, Karnataka.

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