Subir Gokarn's column "Financing the recovery" (Muddy Waters, November 17) correctly underlines the banks' inability to meet the increasing credit requirements of business and industry as economic growth appears round the corner. The huge infrastructure sector non-performing assets (NPAs) of banks are also correctly highlighted. A moot point to consider is that commercial banks are primarily the purveyors of working capital, as indicated by the nature of their deposit maturities. Their foray into infrastructure financing is comparatively of recent origin and policymakers must admit that the experiment has not been a successful one. Our banks are not capable of giving attention to various infrastructure sectors continuously and thus developing sector-specific appraisal and monitoring skills. The financial system needs to again create long-term financing institutions. Otherwise, despite ample deposit resources, the banks will come a cropper in this respect.
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Y P Issar Karnal
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