Letters to the editor dated April 6, 2021

This has reference to ‘Privatising public sector banks isn’t a good idea’ (April 6). The need for privatising public sector banks (PSBs) arises not merely due to the high NPAs. The expansion of PSBs started in the 1970s with the opening of branches in rural and non-banked areas and these banks have done excellent service in inculcating banking habit across the masses. There is no need for such a large network of bank branches now due to digitisation and consolidation is necessary.

In the process, the need for so many PSBs does not arise and the government owning fewer banks run professionally and on profitable lines rather than having stake in so many banks is appropriate. The government may have stake only in few banks for its own needs also and have them run autonomously. It is time that the PSBs are run as independent business units and they should not be used as saviours of failing banks always. A right mix of PSBs, private banks, foreign banks, co-operative banks and small finance banks is good for the growing economy.

Mumbai

The stumbling blocks

Since the nationalisation of banks in 1969 and 1980, the nationalised banks have been contributing much to economic growth and social development. The growth in branch network, rural development, financial intermediation and financial inclusion are largely due to the vital role played by PSBs. The excessive credit expansion beyond the absorption capacity of the various segments of the economy from time to time has paved the way for the exponential growth in bad loans. The policy measures and the tools to deal with bad loans have not delivered the intended results. The Covid- induced negative impact on the economy has taken a big toll on banks as well, especially PSBs as they are in the forefront of efforts to revive the economy.

The poor performance of PSBs is largely because of interventions by the government, inadequate surveillance and oversight of the banking regulator, inefficacy of the policies on governance and poor management of risk. This is compelling the government to infuse capital to comply with the regulatory requirements, and thus causing a heavy financial burden on the exchequer.

Changanacherry

This refers to ‘Primary froth’ (April 6). Bull markets always witness a flurry of IPOs as all those companies want to cash in on the boom. But it is heartening that the quality of these IPOs is better now, which means that investors’ money is at less risk. However, for retail investors, the current situation is not ideal to park money in IPOs. They should rather invest in listed stocks which have proven credentials or take the mutual fund route. Retail investors shouldn’t risk taking too much exposure in IPOs.

Noida

When Prime Minister Narendra Modi on Sunday held a high-level meeting with senior government officials and prominent health experts, he emphasised the importance of people adhering to established Covid-19 health protocols. The daily Covid-19 cases had reached a grim milestone of one lakh with Maharashtra accounting for a significant chunk of the cases. No doubt, it is a matter of serious concern. It has taken just 20 days for the daily tally to rise from 20,000 to 80,000 during the second wave compared to the 64 days it took for a similar spurt in the first wave.

This suggests not only how fast the surge in the second wave is, but also lent some credence to the view that a new double Covid-19 variant and the UK variant, with its ability to infect humans more easily and re-infect people, could be fuelling the present second wave.

A worrying aspect of the second wave is the increasing number of children easily falling prey to Covid-19 infections.

Under these circumstances, it is important to intensify vaccination and ensure people don’t show any laxity and squander all the gains the country has made so far in its long-drawn battle against the contagion.

Sholavandan, TN

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