This is in reference to “Lenders must classify willful defaulters within 6 months of conversion of accounts to NPA” (September 22). Public sector banks need a strong recovery system, especially to recover funds lent to large borrowers. Political interference is one of the important reasons for the rise in non-performing assets (NPA) of public sector banks. Whether to finance a company or restructure a loan should be entirely up to the banker, and the banker should not be subject to any political pressure. Loan waivers impose severe financial constraints on the banking industry. Most of the loans were waived for elections or to satisfy demands of various political parties.
The government should give full support to banks in dealing with large willful defaulters who have fled abroad.
too little too late
In a surprising move, the Reserve Bank of India (RBI) directed lenders to classify willful defaulters within six months of converting their accounts into NPAs, after debts of over Rs 2,500 crore were waived off or written off. Even small loans are considered after weighing various factors and determining safety and security. None of these factors appear to apply when it comes to approving jumbo loans. Even the RBI’s current direction is only about classifying defaulters and not about lending patterns or ensuring repayment processes. The lack of deterrent penalties and keeping banks’ operations away from political interference may be seen as an attempt to protect people’s money from deliberate looting.
Support the economy
This refers to “FinMin’s firm belief in the strength of the household sector amid rising lending trends” (September 22). Predicting the economic behavior of households is difficult. The RBI should formulate monetary policy based on the situation. If household savings fall, the government can fill the gap by depositing much of the tax revenue (forced savings) into banks. Regardless, one day we will say there is a recession and advise people to spend their money. We say that one day, falling savings are a cause for economic concern. We cannot have our cake and eat it too. Let people live the way they want. The government and the Reserve Bank of India should monitor their economic activities and take appropriate measures to keep the economy balanced.
S Ramakrishna Saye
Canadian Prime Minister Justin Trudeau accused Indian agents of being responsible for the killing of Canadian citizen and prominent Khalistan leader Hardeep Singh Nijjar without substantive evidence, leading to bilateral tensions between the two countries. The relationship goes into a downward spiral. Rather than working together to reduce tensions between the two countries, Trudeau appears to be leveraging the influence of the extremist fringe of the Sikh diaspora to engage in toxic domestic politics. Khalistan supporters enjoy enormous political influence in Canada, and the Canadian government treats them with caution and is insensitive to India’s legitimate concerns about threats to its sovereignty from Khalistan separatists.