The analysis is very good. The cost of services can be brought down considerably if the banks can improve the credit portfolio and the expenditures incurred on the ever increasing Non Performing Loans (NPL) are minimised if not avoided. NPLs cost banks heavily in the form of legal expenses, monitoring and supervision charges, maintenance of securities if any, provisions,loss of opportunity costs because of nonavailability of funds for recycling, write off of loans etc. In fact all these costs are unfortunately passed on to all stake holders of banks other than bad borrowers and nobody bothers about it. In this back ground, this sort of analysis will help the service takers to understand that they are subsidising the NPLs of banks and the borrowers enjoy at the cost of others who include the common tax payer who have not entered banks.
from: Dr.T.V.Gopalakrishnan
(This comment is in response to the article on 'Customers are paying more for Banking Service' in Business line dated 14/09/12)
Posted on: Sep 14, 2012 at 08:01 IST
