With reference to the report, "Autonomy for government banks remains on paper" (August 31), the banking sector, especially public sector banks, had a bitter experience with credit camps/loan melas in the past. Despite this, the Centre is stepping forward with the Prime Minister's Mudra Yojana (PMMY) loan mela, purportedly to augment self employment and job creation.
The government is looking for ways other than direct lending to keep banks from taking commercial decisions on their own, lest quality is compromised and this leads to loans turning bad.
For the bamking system to become a growth engine, banks need to frame their own credit policies in tandem with the objectives of the government and the banking regulator. Autonomy for banks deserves greater importance even as these institutions need to be monitored to ensure that they comply with the policies of the government and the Reserve Bank of India.
Considering the cost involved in opening accounts under Pradhan Mantri Jan-Dhan Yojana, if roughly half these accounts remain dormant, that is not a viable business proposition. The government needs to ensure rapid transfer of cash benefits under Direct Benefit Transfer as well as compensate banks adequately for the remittance effected under the scheme. Banks too need to gear up their machinery to make dormant accounts active.
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The government is looking for ways other than direct lending to keep banks from taking commercial decisions on their own, lest quality is compromised and this leads to loans turning bad.
For the bamking system to become a growth engine, banks need to frame their own credit policies in tandem with the objectives of the government and the banking regulator. Autonomy for banks deserves greater importance even as these institutions need to be monitored to ensure that they comply with the policies of the government and the Reserve Bank of India.
Considering the cost involved in opening accounts under Pradhan Mantri Jan-Dhan Yojana, if roughly half these accounts remain dormant, that is not a viable business proposition. The government needs to ensure rapid transfer of cash benefits under Direct Benefit Transfer as well as compensate banks adequately for the remittance effected under the scheme. Banks too need to gear up their machinery to make dormant accounts active.
VSK Pillai Kottayam
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