With reference to the news that the RBI may hold repo rate cuts till September -- while the RBI advocates benign austerity, the government guns for growth through reduction of key rates. A declining global economy must worry us all.In our anxiety to tweak key rates for growth, will we end up in a flood of liquidity as global demand falls?

China has learnt a belated lesson in its rush to better 9 per cent plus growth through liberal flow of money into housing and infrastructure. We may well have a case for easing liquidity now, but prudence lies in the deep study of trending global indices.

R Narayanan

Ghaziabad, Uttar Pradesh

Leave bankers alone

This is with reference to the editorial, ‘Temporary reprieve’ (August 3). Besides infusion of funds, the finance ministry/RBI should take strict steps to curtail the NPAs. Political interference is one of the main causes for stressed bank accounts. It should be left entirely to bankers whether they want to restructure a particular loan or bail out a company and there should not be any outside pressure on a banker regarding credit decisions. We cannot let people’s money go down the drain.

In India, we need more banks that will lend to poor farmers, illiterate people and small entrepreneurs who mainly depend on moneylenders, who in turn squeeze them with higher rate of interests. Changes in rates of interest and increase or decrease in CRR or base rates hardly matters to them. PSBs are custodians of public money and it should be used for economic growth, and financing genuine entrepreneurs.

Veena Shenoy

Thane, Maharashtra

Fresh capital infusion into PSU banks by the government is much needed. But it is unfortunate that the government has gone back on its earlier stand of providing fresh capital only to efficient banks. Now this whole exercise has lost meaning. The government needs to keep itself away from the decision-making of lenders. One more critical aspect is to not let any senior post remain vacant for too long. And the government must device a strategy of evaluating the performance of major accounts of PSUs beyond a pre-decided thresholds, probably twice a year so that early warning signals could be addressed in time. Ultimately, it is not charity.

Bal Govind

Noida, Uttar Pradesh

The legacy of the British Raj, and the current practice of rich developed countries to keep policy formulation and implementation centralised is not suitable to the Indian context. Institutions and organisations across sectors (public, private and PPP) need functional and operational autonomy. Legislatures and governments should formulate policy and give transparent guidelines/instructions for their implementation at the ground level. It should be left to the respective organisations anddepartments to operationalise them at field level. PSU banks need to become independent functional units and work out their gains and losses on account of their allegiance to and association with government. Government should make good the losses emanating from the use of these banks as conduits for accepting deposits or giving loans.

MG Warrier


The government has again come to the rescue of wayward public sector banks by pumping in a hefty amount of capital without eliminating the major cause of this repetitive malaise — burgeoning NPAs due to submission to political pressures or their own greed or both. No top bank executive has been held accountable for this lapse and some have prospered in spite of this.

The government did not even stick to its view of helping efficient PSBs only. Earlier, it yielded to the wage demands of bank officers without insisting on performance-linked pay for them as is the common practice in all good organisations. Unlike the hapless taxpayers who sustain the erring PSBs , shareholders of private banks are more businesslike.

It is time the government acted on the recommendations of the JP Nayak committee for governance reforms.

YG Chouksey


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