Letter to BS: Weak financial institutions need operational reforms

This refers to “If PSBs can’t lend, they should be privatised” (June 29). It seems Niranjan Hiranandani’s (pictured) panacea for lack of public sector banks (PSBs) lending is the privatisation of PSBs. The PSBs are not lending because their earlier reckless lending has turned into non-performing assets (NPAs). These NPAs are under-capitalised and the banks are restrained by the prompt corrective action framework as they do not meet the stipulated regulatory financial parameters. He says that “excessive funds lying with banks should be disbursed in the market”. Banks are in the business of financial intermediation that is, prudent lending, so