Letter to BS: Capital infusion and bank-specific reforms must go together

Capital infusion without strong mechanisms for swift recovery of the loans is futile

This refers to the editorial “Recapitalisation sans reform” (December 28). The resolution of the gigantic non-performing assets (NPAs) to improve the net worth and the return on assets is a long-term exercise. In fact, weak public sector banks are losing market share and credibility resulting in an erosion of market capitalisation and loss of confidence. It is preventing banks from raising capital from the market.

The outstanding loans are a result of a combination of factors like economic downturn, reckless lending, weak governance, corrupt practices and loan frauds. The lending of the banks needs to be under the strict check of