Bad loan crisis shows signs of subsiding, say analysts

Bad loan crisis shows signs of subsiding, say analysts: According to Moody's, recent ordinance and RBI's action on joint lenders' forum are credit positive...

Non-Performing Private Sector

This refers to Anup Roy’s piece “Bad loan crisis shows signs of subsiding, says analysts” (May 11). Public sector banks continue to remain the whipping boy for the non-performance of assets created in the private sector. All through, the comparisons have been the percentages of gross and net NPAs accumulated in ‘public’ and ‘private’ sector banks. Rarely one reads anything about the context of formation of State Bank of India, Bank Nationalization, current business mix or share in banking business held by the two categories of banks.
Remember, both categories of banks are sourcing their resources from public deposits and are serving the same clientele. 
Stricter and prudent classification of stressed assets at the instance of RBI doesn’t change the health of such assets. If PSBs are to continue to perform the role expectations of nationalization, they need a level playing field in choice of clientele, area of operation, sectors to be financed and more importantly in managing HR related issues including recruitment and compensation packages of staff.  If some un-remunerative or loss-making sectors including agriculture or social sectors have to be financed by banks for policy reasons, they should be identified by GOI and entrusted to banks for financing on mutually agreed terms, which will include compensation for losses. Here the criterion should be specialization in work and not a differentiation between public and private sector banks.
 Major portion of the so called "stressed assets of banks" are in the private sector, and all of us continue to blame the banking regulator and the Public Sector Banks which are abused as conduits for mobilization of deposits from the public and transferring the public resources to private hands by design. If citizens decided to keep their hard earned savings only with the trustworthy, reliable private sector banks(In sum this is the impression analysts are trying to build up in the minds of depositors!) only, how public sector banks will misuse public funds?
Let us ponder over, contemplate and come out with views. Taking this debate forward will be in public interest.
M G Warrier, Thiruvananthapuram


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