Letters to the editor dated August 12, 2021

With reference to ‘Time for new generation stock exchanges’ (August 12), the orderly growth of exchanges is vital for the sustained and transparent trading of stocks. The evolution of new market dynamics opened up trading platforms in multifarious products ranging from common stocks to commodities, metals, energy besides vertical integration like index stocks, etc.

As rightly suggested, the functional efficiency of stock exchanges can be further improved by adopting new technologies like blockchain and AI not only to boost investor confidence in the markets, but the same would pave the way for introduction of trading in digital currencies and other innovative products. The demutualisation of exchanges removed the earlier monopolistic ownership and control and the related misdeeds and any proposal to enhance the promoter cap should not become an operational hazard again.

Bengaluru

Apropos the edit ‘Heat is on’ (August 12), the belief that the consequences of global warning are somewhere far away in the future has lulled the people into a false sense of complacency.

Now that landslides, floods and forest fires are hitting the earth in one corner or another there is panic all around. Those nations like India who are dependant on agriculture are more vulnerable. There has to be a concerted effort by all nations to reduce the carbon footprint. Nature does not recognise artificial lines which mark nations. Either we are together or we perish together. The choice is ours.

Mumbai

This has reference to “10 top banks create secondary market for corporate loans” (August 12). The concept of an online platform for corporate loans has many advantages.

The banks having large loans to some corporates may downsize their exposures and take part in new needs of the same borrower or others to that extent.

It also paves way for effective risk management in terms of industry and counterparty risks.

On the other hand, it is to be noted that loans are not commodities and besides the servicing of the loans, the conduct and nature of the transactions, market intelligence on the borrower, the turnover of accounts and quality and valuation of securities and many soft issues are very relevant to which only banks are privy and will not be available online.

Hence the banks acquiring loans online should carry out elaborate due diligence.

Mumbai

The creation of a secondary loan market association (SLMA) by the top 10 banks is a welcome move. Banks in India are straddled with huge NPAs, entailing strict provisioning requirements, hampering their further lending. Additionally, with deposits being always ‘repayable on demand’, their closure, especially of big ticket institutional deposits, invariably causes asset-liability mismatches — a perennial problem faced by banks.

With further constraints such as capital adequacy, SLR, CRR requirements, management of concentration and other lending risks, banks may not be in a position to participate in syndicated lending right from origination. However, they may be in a position to acquire specific loans in the secondary market, a few years down the line, when such constraints ease. .

Chennai

This refers to the report ‘Ending of retro tax will boost industry’s trust in the government, says PM’ (August 12). PM Modi exhortation to India Inc to promote Brand India and step-up investments, especially in R&D, sounds prudent. Unfortunately, red tape continues to bedevil the business ecosystem. Corruption is rampant in departments entrusted to provide statutory approvals for operations.

A handful of magnates are able to corner the lion’s share of wealth and effortlessly. Potential investors will develop an appetite for risk only when the extant players are in sound health.

Noida

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