Somasroy Chakraborty: Soft loans will be hard on the exchequer | Business Standard

Somasroy Chakraborty: Soft loans will be hard on the exchequer | Business Standard

Online comments posted on October 24, 2013:

Finance Minister Chidambaram had made an unqualified statement that ‘the government will not dilute its shareholding in state-run banks and infuse the budgeted Rs14,000 crore for bank capitalisation through preferential allotment’ at the meeting of bankers. This should be welcomed by public sector banks as a supportive gesture at a time when they are being ‘whipped’ for not giving small loans, for high NPAs and not being fast enough in ensuring financial inclusion. As owner, GOI has the responsibility to ensure that PSBs are adequately capitalized.
Post-nationalisation, there is a general feeling that all ‘difficult’ jobs, such as opening branches in rural areas, giving small loans to low income group borrowers, sustaining loss making industrial houses and public sector undertakings, ensuring flow of credit in politically sensitive geographical areas etc have become the exclusive previlege of public sector banks.
Private sector banks have been enjoying lending to the creamy layer of the clientele in urban and metropolitan areas. They were provided, for a long time, bye-pass routes even for achieving their priority sector targets.
On the same day, Financial services secretary Rajiv Takru minced no words to clarify the government’s intentions when he said ‘the government will infuse additional capital in the banks in the last quarter of this fiscal, based on their performance in the concessionaire loans, which banks are offering in the festival season’. The secretary has nicely re-invented the ‘priority sector’ idea to suit the wishes of present generation.
When can we expect public sector banks becoming professional in their approach with internal expertise and freedom to manage their manpower and business, with a ‘level playing field’, competing with their private sector counterparts, which was one of the ideas behind bank nationalisation, in the first place?

  M G WARRIER, Mumbai


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