This refers to Debashis Basu's column "What Narendra Modi won't ask bankers" (Irrational Choice, December 29). I agree with the writer about the pressing need to reduce non-performing assets in public sector banks (PSBs). But to achieve this, it is necessary to make changes in the credit appraisal techniques and to ascertaining the creditworthiness of prospective borrowers. While a lot of emphasis is laid on credit monitoring and follow-ups, it needs to be understood that such monitoring will not improve the asset quality of PSBs unless there is proper selection of borrowers. Without crony capitalism, political influence, a few corrupt bankers - and, in some cases, genuine business failures - such massive bad debts are difficult to digest. The solution seems to be in the dilution of government equity and control, and restructuring PSB boards.
I doubt if PSBs are arm-twisting businessmen to buy a life insurance policy, as this is reportedly done by private banks. This can be verified from these banks' profit and loss figures, wherein their fee and other income is much higher than PSBs, with the exception of the State Bank of India. But then, when banks are competing for profits and interest spreads are getting thinner, this is expected so as to take care of capital adequacy norms.
It is unfair to compare PSBs with private banks, as PSBs have to shoulder higher social responsibilities - from small account holders to pension accounts and so on.
Kiran P Ranade, Pune
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