Thursday, September 19, 2013

Capital Infusion to cover up NPAs of PSBs

Instead of taking steps to recover the bad debts of banks through some very serious steps, injecting tax payers money as capital into the PSBs is unjustifiable and cannot stand public scrutiny. The bad borrowers have enjoyed public funds and are allowed to go scot-free. The depositors who have kept their life savings in banks are paid 4% interest rate when the inflation is in double digits. All stake holders of banks and the economy bear the brunt of non performing advances of banks and this sort of subsidization has been going on for decades without being questioned by stakeholders of banks or resisted by the authorities. This approach of financing banks when the banks themselves finance the capital of corporates started by unscrupulous borrowers cannot be considered as good economics . The culprits should be penalized and discipline should be introduced among the borrowers and banks.

Dr T.V.Gopalakrishnan
( This comment in response to an article Government to infuse Rs  14000 crores in PSUs in next 15 daysthat appeared in Business Line dated 19/9/13).  

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