Letter to BS: Forbearance schemes in whatever form are a moral hazard

This refers to “Be forewarned” (February 26). Forbearance schemes in the form of either restructuring or delayed recognition of loans is a moral hazard. It encourages reckless, politically induced lending but reduces transparency about the loan classification and actual status of non-performing assets (NPAs) in banks. It builds up NPAs in the system which come to light later and bank officers are held to account for not following the norms of due diligence. One must recognise the reasons for the problems of the micro, small and medium enterprises (MSMEs) and the realty sectors. A lot of damage was caused to