Letters: Window dressing, again

Apropos the report “Year-end rush sees Rs 2 lakh cr flowing into banking system in one week” (April 14), the increase in deposits and loan growth can be attributed to window dressing. Bankers dress up their balance sheets in the last week of every fiscal to showcase an impressive record. There is, in fact, a double counting aspect to deposits growth; a major portion of it has come from the loan book. There are customers who are willing to oblige their bankers by helping them build up total business growth (deposits plus advances). These deposits or loans vanish after the first week of April. There is a small cost that “helpful” customers have to pay (the difference between lending rate and deposit rate) but banks make up for it by offering concessions in other services during the year. Such bloated total business heavily dents profit growth. Since most public sector banks are listed entities, only shareholder activism can check this occurrence in the coming years.

K V Rao Bangalore

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