This refers to the report "Foreign banks say new priority sector lending norms not encouraging" (March 2). Foreign banks have always been reluctant to fulfil priority-sector lending (PSL) targets. The reasons cited by them for this reluctance appear quite logical. On a finer analysis though, it seems they are wrong. They want the cream of the banking business and do not want to dirty their hands. For that matter, no bank in India (including public sector banks) is keen on meeting PSL targets. That is why the Reserve Bank of India (RBI) has imposed these targets.
Why is every banker reluctant? First, it is about volume and not value-banking. Second, a banker has to adopt a down-to-earth approach and not touch it with hand gloves. Third, they should trust their category of borrowers. Fourth, even a big loss constitutes only a small percentage of total advances since per head exposure is minuscule. And last, the banker should identify staff who are keen on financing borrowers under this segment.
Even if the government and RBI relax the norms further, no banker will be keen on financing this sector.
K V Rao, Bengaluru
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
