With reference to the editorial, "Financial stability" (December 25), developing a bond market should be among the government's key policy priorities. The observation that while bad news about banks can be hidden, bad news about borrowers is visible to all is totally wrong. Bad news in both cases is hidden through the ingenuity with which the accounts of both banks and corporate establishments are liberally fudged and balance sheets and profit and loss accounts window-dressed.
The situation has only deteriorated and this is reflecting in the poor health of banks and corporate establishments. Their condition is making all stakeholders in the economy suffer. Public sector banks survive without closure, thanks to unlimited government guarantee and automatic cross subsidisation facility through depositors and taxpayers.
Corporate entities in bad shape survive due to laxity in governance, relaxed regulatory supervisory standards and lack of timely punitive action from authorities, including the Reserve Bank of India (RBI). This kind of atmosphere is not congenial for investments and production.
T V Gopalakrishnan, Bengaluru
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The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
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E-mail: letters@bsmail.in
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The situation has only deteriorated and this is reflecting in the poor health of banks and corporate establishments. Their condition is making all stakeholders in the economy suffer. Public sector banks survive without closure, thanks to unlimited government guarantee and automatic cross subsidisation facility through depositors and taxpayers.
Corporate entities in bad shape survive due to laxity in governance, relaxed regulatory supervisory standards and lack of timely punitive action from authorities, including the Reserve Bank of India (RBI). This kind of atmosphere is not congenial for investments and production.
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Achieving financial stability in such an atmosphere is a distant dream and offering the development of the bond market as solution is a far-fetched idea. The only solution is to bring in professionalism in banks, let the RBI discipline banks as well as borrowers by introducing an inbuilt mechanism of accounting and rating that contains information on non-performing loans and self-liquidation of such loans without depending on depositors and taxpayers.
T V Gopalakrishnan, Bengaluru
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number