Letters to the editor dated July 30, 2021

This is with reference to ‘Why bad bank is good’ (July 30). The new asset recontruction company (ARC) will address legacy non-performing assets worth ₹2-lakh crore. The RBI’s stress tests show that the bad loan ratio will rise to 13.50 per cent by September 2021.

Hence, the Indian Banks’ Association proposed that the initial focus of the bad bank be on fully provided loans which are not resolved either under the Insolvency and Bankruptcy Code or other extant frameworks.

In fact, after the transfer the assets to the ARC, there still is a lot of work like protection and maintenance of assets, and sale of assets at appropriate prices.

For the Indian banking system, a lot rides on the success of the bad bank. As long as fresh loans are disbursed bad loans will continue to accrue and there will be the need to clean the balance sheet every year. Hence, the bad bank should be made a permanent body.

Bhimavaram, AP

That there is no let-up in Covid-positive cases in Kerala and the numbers keep increasing by day, are a cause for great concern. The State’s unique demographic profile such as high density of population and a substantial number of elderly people have made the fight against the pandemic more arduous and complicated.

The slow pace of vaccination is perhaps another worrisome factor that plagues the State’s battle against the virus.

While the State’s excellent public health infrastructure coupled with community-centred approach have helped it reduce the rate of mortality, the road to normalcy is still a long way off. Under these pressing circumstances, Kerala can hardly afford to relax its existing restrictions and people need to adhere to Covid-appropriate behaviour with alacrity.

Sholavandan, TN

With reference to ‘Bonding together’ (July 30), borrowing through the bond route has always been the most viable option for corporates to meet their long term funding requirements apart from tax exemptions.

However, the debt market had seen ups and downs due to market vagaries, risk aversion of lenders, defaults and liquidity issues and the resulting loss of investor confidence in the segment.

Though insulated through regulatory protection in the form of provision of mandatory redemption reserves, trustee mechanism, creation of recovery expenses fund, refined credit rating norms, etc., the same did not augment the growth of bond market.

Lenders’ assessment approach is yet to shift from the age-old asset based security model to asset-light ones. Many ancillary borrower obligations like mandatory credit rating, remittance of security deposit with the bourses and payment of annual listing fees, regulator fee, besides issue-raising expenses, lead to subdued interest of issuing tradeable securities. Considering the inherent benefits available to investors, borrowers and lenders, the bond market needs the required fillip.

Bengaluru

The depositors are insured up to ₹5 lakh makes sense but it is also a tacit admission by the government that more bank failures are in the offing. It shall be more reassuring to depositors if the government avows that henceforth no bank shall collapse. Of late, investors are flocking to the equity market for fancy returns and may burn their fingers.

The government is duty bound to issue advisories to this effect and spell out safeguards if any to protect the interests of such gullible investors.

Noida

This is with reference to ‘Leadership mantra in the age of AI’ (July 30). We need leaders who know the pulse of their staff.

A versatile leader knows how to organise the staff, boost their morale, achieve targets and how to celebrate the success. Managers/executives with good inter-personal skills can take their organisations to great heights.

Thane

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.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.