Stress on profitability: Letter to BS on options to de-stress PSBs

There is an uneasy mix of continuing with the implementation of targeted lending through government-sponsored schemes, loan recovery and profitable functioning

This refers to “Options to de-stress public sector banks” (February 8). It is appropriate to go back in time when pre-nationalised banking catered to affluent sections in urban and metropolitan areas. After nationalisation banks were compelled to change by financing under various government-sponsored schemes from where the concept of priority sector banking took shape. Although such schemes were good on paper, ground reality portrayed a different picture with faulty end use and defaults in repayment of credit. Periodic loan waivers further encouraged defaults in repayments and consequent erosion of capital. The present level of non-performing assets stands testimony to this,