<b>Letters:</b> Solitary banks

This refers to the report "FinMin may not allocate additional funds for bank recapitalisation" (June 4). The proposal to not provide funds for the recapitalisation of public sector banks (PSBs) in the coming budget challenges the PSBs' time-held assumptions on their fund requirements. According to the P J Nayak Committee, PSBs, between now and March 2018, need Rs 2.10 to Rs 5.87 lakh-crore. Given the magnitude of these figures, the new government's fiscal consolidation target would get impacted. Either PSBs have to be privatised or go for a different governance structure as suggested by the committee. In the past, government ownership has impeded the functioning of PSBs. In fact, the PSBs' financial health has deteriorated due to unwarranted government interference. The new governance structure mooted by the Nayak Committee, would bring operational freedom to the top management of PSBs. It is another matter whether the top managements of PSBs would be able to steer these banks to a new path, first by addressing the burgeoning issue of non-performing assets and then leading them to a new growth trajectory.

The finance ministry's proposal to have a separate statute for high-value wilful defaulters with special courts is novel and would cut the Gordian knot that has tied the PSBs from taking action against the defaulters.

K V Rao Bangalore

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