Letters

Letters to the editor dated November 26, 2020

| Updated on November 26, 2020 Published on November 26, 2020

Corporate banks, a bad idea

With reference to the article ‘Corporate Banks — the idea whose time has come’ (November 26), the very thought of corporates and NBFCs owning banks is ill conceived and if accepted will only further weaken the banking system.

What the economy badly needs now is a strong financial system consisting of very sound and healthy banks with high professionalism, well regulated and supervised non-banking finance companies and cooperative banks without any scope for having any systemic risk.The solution to the existing bad loans crisis is to professionalise the institutions and bring them under effective and meaningful regulation and supervision under a highly independent regulator accountable to parliament. There is also a paramount need to widen and deepen the capital market, particularly bond, forex and commodities markets.

TV Gopalakrishnan

Bengaluru

Move with caution

Industrial houses/corporates own banks in Japan and South Korea and ‘concentration of economic power’ and ‘connected lending’ issues never surfaced due to regulatory checks and balances. Corporate banks in India are to be pursued cautiously, given the recent cases of LVB, PMC and YES Bank. India is adequately banked at the moment and there is no need to bring in corporates and industrial houses at this juncture.

M Ravindran

Nagercoil

Tying down labour

With reference to the article ‘Flogging labour...’ (November 26), Marx had feared that the clout of the capitalist class makes it appropriate a far larger share of the pie to the detriment of labour. As capitalists usurp legitimacy under “a progressive democracy”, labour movements may soon become history with technology getting to define and demand newer skill levels.

The Left stemmed this exploitation for a while and the informal sector was able to secure some permanence, standing and a modicum of protection, but it is on a steady wane. It is sad that the very hands that are needed for a $5-trillion economy, are sought to be tied at the back with reformist jargon. It would be unfortunate if reforms are seen as weapons rather than tools to build the nation's economy.

R Narayanan

Navi Mumbai

What ails our banks?

With reference to the news report ‘Cabinet approves merger of Lakshmi Vilas Bank with DBS Bank India’ (November 26), the decision was on the expected lines. While Union Minister Prakash Javadekar claimed that this move was to ‘safeguard’ the deposits of 20,000 account holders and in the interest of financial and banking stability the moot question is: Why was the situation allowed to reach such a pass in the first place, even as LVB’s financial position reportedly remained in the ‘doldrums’ during the last one-two years? More importantly, its current ‘operational’ status may not be attributed to some sudden development. The Cabinet is justified in asking the RBI to fix accountability on the former directors of LVB, but what about the efficacy of the RBI's ‘supervisory’ role here? It is a different matter that it had, in consultation with the government, superseded the LVB board and appointed an Administrator to protect the depositors’ interests.

So, why is our banking sector currently passing through such a turbulent period?

SK Gupta

New Delhi

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Published on November 26, 2020
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