Letters: Uniform policy needed

Apropos the editorial, “No half-measures” (June 2), despite existing schemes and various steps to resolve the bad assets crisis, the situation is turning worse and having a cascading effect on the performance of banks.

Some private sector banks have resorted to under-reporting of their bad assets. The measures for solving the problem are either not on target or not comprehensive enough to cover those segments of the economy that are contributing to bad assets in the banking sector.

At a time when the banking regulator has started taking prompt corrective action with several public sector banks, speedy resolution of the bad assets problem is of paramount importance. As a supporting measure, the monetary policy committee should look for a reasonable cut in policy rates and ensure fast transmission of the effect. This will ease the debt servicing capacity of the sectors burdened by debt.

Resolution of bad assets depends on the banks’ various strategies and the legal system. Based on guidelines from the banking regulator, each bank has its own broad-approved recovery policy and is accordingly executing recovery action. However, a radical policy drawn up by the government and regulated by the banking regulator will ensure uniformity in executing corrective measures across the economy. 

The government, the Reserve Bank of India and other regulators need to act in tandem to ensure positive performance results from the banking sector. Banks which fare poorly should be put under a strict watch, so that that they deliver the requisite results within the time allowed.

V S K Pillai   Changanacherry

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