Recapitalisation is key

Net interest margin of banks narrowed to an extent that lending activity stopped or decelerated

In the article, “Don’t dither on bank recapitalisation” (May 16), T T Ram Mohan says banks in India, particularly those in the public sector, should not be deprived of much-needed capitalisation in this hour of crisis.

Highlighting extracts from the Economic Survey 2016-17, Ram Mohan says non-performing assets (NPA) of banks are largely due to external economic parameters going awry; the managements of banks are not solely responsible for the turmoil. He has provided precedents of how recapitalisation of banks in the US and European Union brought about a turnaround from subprime crises.

Subsequent to the Reserve Bank of India’s Asset Quality