Anaesthesia shouldn't make banks comatose: Deepak Parekh

Anaesthesia shouldn't make banks comatose: Deepak Parekh: Surely the objective of the clean-up is to fix the financial rot, not to incapacitate banks: Parekh

February 18, 2016
Beyond market capitalisation

This refers to the report “Anaesthesia shouldn’t make banks comatose” (Business Standard, February 18). The specialist-syndrome suffered by medical profession, it appears, has spread to experts in the financial system. The recognition of higher levels of stressed assets and resultant need for huge provisioning are not just the result of inefficient management of public sector banks, as is being made out by some experts.
The observation coming from Deepak Parekh that ‘the problems of PSU banks won't be solved unless the government allows talent to come in, new investors to run banks and stops diktats on who to lend to’ and the appreciation of government’s moves  ‘to wipe out corruption at top levels, make auctions transparent and great strides made in financial inclusion’ followed by the suggestion that ‘India needs to fix its infrastructure through faster regulatory approvals, less bureaucracy and increased allocations in social sectors like health and education’ covers only certain dimensions of the problems India’s banking system and economy . One expects from a statesman of Parekh’s standing to think beyond market capitalisation and indices of stock prices and mention something about the wilful defaulters among the rich, who cause embarrassment to the banking system and its regulators.
This report closely follows the Supreme Court’s order to RBI to furnish a list of defaulters with loans of Rs500 crore and more in the past five years. The central bank of the country, which found itself in a tricky situation when RTGS came to a standstill for a few hours, has borrowed six weeks’ time to make the list. Enough evidence to show that technology alone will not ensure flow of work in banks. Unless government and regulators can be a little more harsh on wilful defaulters and recalcitrant corporates, there will be lawyers and economists to make taxpayer pay for the failures of greedy individuals.

M G Warrier, Mumbai


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