Letters

Letters to the editor dated February 24, 2021

| Updated on February 24, 2021

Rejuvenating PSBs

Apropos the editorial ‘Grooming PSBs’ (February 24), the objections raised by the AIBEA to the proposed privatisation move of some public sector banks (PSBs) is a case of selective perception. As against the recent failures of the two private banks, there are many others which are doing well.

It should be noted that privatisation is being considered only in the case of those banks that have not mended their ways, despite several props and measures by the RBI. Irrespective of the industry, no government can go on pouring taxpayers’ money into entities that are pretending to be asleep.

In addition to accelerated digital transformation, governmental non-interference, aligning the top management compensation structures to markets and ushering in performance-linked pay for the rank and file, PSBs should also be allowed to recruit the right talent, without shackles, at all levels. While strengthening compliance and the whistle-blowers’ movement, the banks should be allowed to function without the ‘vigilance fear’, except in the case of sensational frauds.

V Jayaraman

Chennai

Stick to core business

Disinvestment or privatising two ailing PSBs has been in the air for quite some time. True, the asset portfolio of a bank is the basis for its good health.

If the asset quality becomes questionable, it will have its cascading impact on rate of return, recovery performance, NPA, provisioning and, ultimately, profitability.

All internal managements of the banks must ensure that the manpower handling assets have enough background ranging from asset creation, recovery, follow-up and in asset monetisation and this should be an on-going exercise taking into account the attrition factors too.

Besides, PSBs must be freed from the the following: doing non-banking business such as cross-selling of products such as insurance or mutual funds; being tagged for other services like service centre for Aadhaar, etc; and opening of accounts or activities related to government sponsored programmes for sometime and, if required, a special cell can be created in each city to cater to such needs.

All these would enable PSBs to focus on core banking activities such as acceptance of deposits, qualitative lending and recovery.

RV Baskaran

Chennai

Fiscal flexibility

This refers to ‘How far can the fiscal deficit be stretched’ (February 24). There is not a single nation that would be spared this introspection after the devastation caused by the pandemic. And the issue is sure to spread over a far larger canvas. India’s debt-GDP ratio is already hovering around 89 per cent. We we are in a club of countries, big and small, which are accumulating uncomfortable levels of sovereign debt.

This year global economies will defray $130 billion more for debt servicing. Not many of them can afford to be too circumspect on fiscal continence.

The Budget seeks to enable the economy expand fast enough to cover debt-service obligations and yet spend on growth.

The issue is not so much about fiscal rectitude today as on gearing ourselves to ensure future growth with extreme diligence and efficiency.

R Narayanan

Navi Mumbai

Coffee growers jittery

‘Europe’s muted demand weighs on coffee exports’ (February 24) depicts only one side of the woes the coffee sector has been facing. The larger issue is with the coffee growers, whose direct contributions to the nation’s overseas trade involving forex earnings cannot be discounted.

The vagaries of nature especially since 2018, rising input costs, low yield, labour shortage due to the pandemic and unrealistically low price of pepper, which is a major inter crop in coffee plantations for fiscal feasibility, have inflicted a huge blow on the growers. While the exporters have the option to store the beans for deferred trade, the Coffee Board must come out with a feasible option to bailout mainly small and medium growers who are unable to face the ongoing crisis.

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.

Published on February 24, 2021

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