Business of banking

Media Response June 26, 2023 Business of banking This refers to the report "'Unsecured' loans handed out to NBFCs come under RBI scanner" (The Hindu Business Line, June 26). One, as a depositor is tempted to ask an innocent question : Who is doing real banking business? The banks which created a nationwide network after obtaining banking licences, or the various arms through which the resources mobilised by banks are dispensed as credit to the end-user? The question arises because, with the increase in the number of pass through agencies, the interest banks are able to pay for the deposits mobilised comes down and the cost of credit for the ultimate borrower goes up. The dilution in security requirements at lower tiers of the credit conduits reduces the recovery rates, cost of which again is ultimately born by the depositors or taxpayers who are not organised and therefore remain silent. M G Warrier Mumbai

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