Letters to the editor dated November 27, 2020

| Updated on November 27, 2020 Published on November 27, 2020

Allowing corporates in banking

This refers to ‘Corporate banks need not be a bombshell’ (November 27). One has to weigh the pros and cons before allowing large corporate and industrial houses to promote banks.

But the fact remains that the regulator has to strengthen its supervisory mechanism before new players are allowed as promoters into banking.

Most of the bank failures in recent times are on account of financial mismanagement by promoters with banker-corporate and political nexus being one of the prime factors. With housing finance companies and co-operative banks being brought under the direct supervisory purview of RBI, the regulatory conundrums are bound to increase manifold.

Hence the moot question is whether the RBI is equipped to face the challenge of corporates and industrial houses managing banks considering the inherent risks involved.

Srinivasan Velamur


Simultaneous polls

This refers to ‘PM pushes for simultaneous polls’ (November 27). The push for ‘one nation-one election’ needs to be considered with caution. If implemented, it may lead to unnecessary mix-up of local and nation-level issues in the minds of the electorate. This may lead to sub-optimal choices. The current system of having a staggered election calendar that covers elections at the local, State and national levels at different points of time is best left untouched.

V Nandakumar


The fall of LVB

Lakshmi Vilas Bank had been facing problems for the last three-four years, which the RBI knew very well as it had its representatives in the bank’s board for more than two decades. Instead of giving such a long rope to the bank, the regulator should have interfered when the bubbles were visible in the balance sheet. Of course, we are happy that the RBI has acted at least now in saving depositors’ money.

However, it must be pointed out that the amalgamation decision was taken in haste. First, investors have been orphaned by wiping out the share capital account — especially in this case, the promoters are a minority and the public at large are the majority. This sort of decisions will make small investors to think twice before investing in equities. Second, it was informed that the present depositors will get the ‘contracted rate’ till the date of merger and then be eligible for a new rate which is far lower. This is not right.

The RBI should intervene and instruct the merged entity to give the ‘contract rate’ till the tenure of the deposit or till it is redeemed, whichever is earlier. Third, while taking a decision on merger, the RBI should have favoured a public sector bank or any private sector bank instead of a foreign bank’s subsidiary as it will create a precedence in the years to come.

And, lastly, the wrongdoers should not be allowed to go scot-free by the government.

V Venkatasubramanian


Coal sector reforms

Apropos ‘Mining value from coal sector reforms’ (November 27), permitting commercial coal mining will break the monopoly of industrial houses that take coal mines on lease. It will augment employment potential, boost production, and reduce the country’s dependence on coal imports. It is surprising that in spite of our humongous reserves of coal we face a shortage thanks. The auction process must be fair and transparent, and the stamp duty must be streamlined so as to reduce the burden on new bidders.

NR Nagarajan


The genius of Maradonna

Much as Da Vinci’s Mona Lisa , Michael Angelo’s David , Einstein’s Theory of Relativity, creations of genius continue to inspire and stir our imagination to this day. And so would Diego Maradonna’s sheer individual brilliance in the 1986 Football World Cup, which would keep the game’s aficionados animated for years. They were all products of the gift of an unique human creativity that was kept pure and pristine within an inner core, unsullied by transient external influences.

R. Narayanan

Navi Mumbai

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 27, 2020
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