NBFCs under PCA

This refers to ‘Regulating NBFCs, the banking way’ (December 21). After the implosion of two leading NBFCs, it is a welcome move on the part of the RBI to bring NBFC sector under PCA (Prompt Corrective Action) norms. But it is intriguing to note the exemption of government companies from the PCA framework, since the biggest state-funded infrastructure development and finance company (IL&FS) was a causality to gross mismanagement. It is akin to keeping public sector banks away from PCA in the case of commercial banks.

Also, though it apparently appears logical to exempt all non-deposit taking (public funds) NBFCs, there are large number of non-deposit taking NBFCs and HFCs (housing finance companies) which have a significant exposure to the Indian financial system in terms of borrowing from banks. If such NBFCs fail, it could have a cascading effect on banks as proved in the past. The implementation of the PCA framework for all deposit-taking NBFCs from October 2022 based on financials of March 2022 seems to be too early since the economy is to recover fully from the impact of Covid, which still looms large.

Srinivasan Velamur


Aadhaar linkage

This refers to ‘LS passes Bill to link voter card with Aadhaar' (December 21). Union Law Minister Kiren Rijiju’s statement that linking of Aadhaar number will ‘purify’ electoral rolls and consequently reduce electoral malpractices cannot be taken at face value. The presence of a large number of fake Aadhaar cards as also holding of multiple cards by thousands of individuals have been reported.

One wonders why the Opposition’s demand to send the Bill to the Standing Committee of Parliament has not been acceded to.

Kumar Gupt

Panchkula, Haryana

BSNL restructuring

This refers to ‘BSNL unions flay restructure proposal’ (December 21). It is indeed surprising that employees of a profusely bleeding organisation can demand promotions/career progression of all the eligible executives. At this time, the very survival of BSNL is in question given its mounting losses.

Given the rapid and disruptive technology landscape of the industry and rising customer expectations, service providers need to be fleet-footed and highly customer-focussed. Whether and how BSNL can be reformed to function profitably in such a scenario needs to be assessed first.

V Vijaykumar


Civil disputes

This has reference to ‘Bill in RS to formalise pre-litigation mediation’ (December 21). The Bill is expected to lay down the rules for mediation in case of civil and commercial disputes. There is already the Arbitration and Conciliation Act, which deals with this subject and it is expected that the new law will provide for institutional arbitration. The mediation, arbitration or conciliation should have a strict timeline in order to be successful, and appeal options should be limited.

In many of the contracts there is provision for arbitration but only the stronger side has the right to appoint the arbitrator. Such anomalies should be removed in the new law and it should be on a par with international arbitration. Legal professionals from international firms should be engaged to bring expertise and professionalism. Arbitration process is expensive and funding methodology is also to be enabled in the legislation.

M Raghuraman


UP elections

This refers to ’The importance of the farmer vote in UP’ (December 21). While Assembly elections in UP and Punjab have been the main trigger for the Centre to repeal the three farm laws, it remains to be seen whether it will bridge the differences between the farmers and the BJP.

However, the BJP’s well-oiled electoral machine has begun moving at a breakneck speed to reach out to people in UP. Even as a divided Opposition is trying to cash in on the Centre’s U-turn on the farm laws and the Covid-19 deaths during the second wave, defeating the BJP could be a formidable task.

N Sadhasiva Reddy