Letters

Letters to the editor dated November 18, 2020

| Updated on November 18, 2020 Published on November 18, 2020

LVB-DBS amalgamation

Apropos ‘LVB amalgamation with DBS Bank’ (November 18), the move would certainly help the latter expand its footprint in India. LVB has been on the radar of the RBI for over a year now, with its galloping NPAs, net losses, shrinking deposits and the negative Tier-1 capital ratio.

DBIL, on the other hand, has a healthy balance sheet. Though a market leader in digital banking, the bank does not have a wide network of branches or a large customer base, with its hitherto focus on metros and cities. The amalgamation would thus be a win-win, with DBIL’s offer to infuse an upfront capital of ₹2,500 crore, instilling confidence in the depositors of LVB, besides attracting more Net savvy customers to the merged entity.

However, the fact that the shareholders of LVB would recover nothing from the amalgamation, besides this being the third bank, after PMC and YES Bank, to fail, within a year, reflects poorly on the financial strength and supervision of private banks in India.

V Jayaraman

Chennai

A welcome move

The decision of the RBI to place LVB under moratorium and merge it with DBS (November 18) is welcome. The bank had a weak financial position and has been affected by promoter interference and mismanagement. Despite low capital adequacy, the bank followed the business model of large banks and entered into capital-intensive areas. Infusion of capital would not have helped the bank because of high NPAs. The RBI should look into the position of all old private sector banks and take similar measures wherever required.

M Raghuraman

Mumbai

A right approach

The new management would bring superior technology and robust risk management systems as DBS, a Singapore-based bank, is known for solidity. This would help LVB regain its lost ground in the banking firmament. Similarly, some of the other old generation private sector banks that face governance and management issues can be tackled similarly, through merger with strong foreign banks. The regulator has to enforce tight supervision so that banks perform to their potential.

M Babu

Nagercoil, TN

Indo-US relations

This is with reference to ‘Promising era ahead for India-US relations’ (November 18). India should make the most of change in guard in the US by encouraging India-US trade, especially in the field of ayurveda products, handicrafts, textiles, tourism, research in healthcare, education, etc. There is much scope for advancing medical research, especially as US is way ahead in this field and there are around three lakh doctors of Indian origin working there. India should try to utilise the expertise of these doctors along with the available advanced research facilities/techniques available in the US. Coming to tourism, easing visas norms for Americans visiting places of interest in India such as heritage sites will give the tourism sector a fillip.

Veena Shenoy

Thane

Regulating NBFCs

This refers to the editorial ‘Wait and watch’ (November 18). Unequivocally, NBFCs are complementing the banking ecosystem, but a few black sheep have shattered the confidence of the RBI. So far, the central bank has demonstrated a reactive approach in dealing with financial institutions. It ought to evolve a balanced approach coupled with robust checks and balances which act as a strong deterrent for wrongdoers. The government, on its part, should not roll out counter-productive measures such as demonetisation.

Deepak Singhal

Noida

Foreign investments

Prime Minister Narendra Modi’s call to global investors to invest in India (November 18) is a welcome initiative. On its part, the government must spell out various areas where foreign investments will be required and remove any stumbling blocks to the flow of funds. This would call for a special set-up or department in the government with the PM himself heading it.

TR Anandan

Coimbatore

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 November 18, 2020
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