NPA blues

The article ‘NPAs: Banks alone are not to blame’ by M Sitarama Murty (August 8) penetrates into the centrality of the problem. Every project is conceived on certain assumptions, derived from past experiences and their extrapolation to the future project period.

A credit analyst’s job is basically to vet the assumptions and interpret the projected financial statements for greenfield projects. In brownfield projects, the pronounced actual financials also will be read through.

He also does a stress test to understand the magnitude of deviation from the standard position it can cause if a set of assumptions move adversely by a reasonable and comprehensible degree. If the stress test is also passed, the project per se is viable and is a bankable proposition.

If one assumption goes totally wrong due to any policy changes or other unforeseen eventualities as ‘homegrown’ and ‘beyond the obvious’ as Murty puts it, all other assumptions also will get affected as a contagion. As usual, the blame is on the bank externally and on the credit analyst internally.

PD Sankaranarayanan

Thiruvananthapuram

NDA and NPA

Keen to revive the economy, the NDA government has announced additional capitalisation of public sector banks, while introducing several other key reforms.

It is essential that there is better co-ordination between States and the Centre so that economy can be put on the right track. To make matters more effective, the government has to maintain an arm’s length distance from these PSU banks so that they can take an independent credit decision.

Bal Govind

Noida

Unconvincing statement

Several Opposition leaders such as Mayawati and Brinda Karat have held that the anger expressed by Prime Minister Narendra Modi over the unending Dalit atrocities was “fake” and dismissed it as a “gimmick”, with an eye on the Assembly elections in Punjab, Uttar Pradesh and Gujarat.

To carry conviction, Modi will have to follow up his angry words with firm action to deny the self-styled cow vigilantes any space to commit acts of vigilantism.

It must be said to the Prime Minister’s credit that he has paused to introspect how things came to such a pass and sensed the danger of letting the avowed gau rakshaks unleash a reign of terror on vulnerable Dalits.

The hardliners within the right-wing groups who suffer from a congenital inability to treat Dalits as their equals seem to be gearing up for a confrontation with the Prime Minister. The Prime Minister could have done more — say, for instance, a visit to the victims of public flogging and the retraction of his long-held regressive view that degrading jobs like carrying human waste are spiritually uplifting exertions — would have gone a long way in convincing the lower classes of his earnestness to undo the injustices done to them by his ideological and political fellow-travellers.

G David Milton

Maruthancode, Tamil Nadu

Unhealthy facts

It is indeed alarming that India ranks high in people suffering from diabetes and that the average age of heart patients has come down.

Only a healthy nation can make a wealthy nation. A pressing need for this government is to provide affordable and accessible, quality healthcare services to all sections of society, especially to the poor and downtrodden.

TS Karthik

Chennai

Show prudence

The festive season,with its inevitable pattern of higher consumer inflation is here. The consumer price index touched a 22 month high in June. RBI estimates that pay panel outgo from August would add 150 basis points to inflation. On top of this, the GST rate could well be set high by the government in the range of 18-22 per cent.

The monetary policy review comes at a right time. Prudence would dictate holding the rates, but prescience may indicate a token increase of say 25 basis points, if only to give credence to government’s announcement on inflation targeting.

R Narayanan

Ghaziabad

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.

COMMENT NOW