The message of the article to all political leaders in general and to Mr Modi in particular that offering of freebies and writing off ofbank loans takes away the Governance standards and it is neither good for the economy nor for the people. Banks' money belongs to depositors and no politician has the right to write off of the loans. These write offs again are carried out at the additional cost to the tax payers money which come in the form of recapitalisation of banks. This sort of approach of the politicians is encouraging bad discipline and it should be condemned by all. This is nothing but very bad Governance and definitely not in alignment with Mr Modis's thinking, propaganda and philosophy. This sort of loans write offs in early 1990s and 2010s by the Central government and by Some State governments, Maharashtra ,Haryana etc though were severely objected to openly and privately by the previous successive Governors of the Resereve Bank, politicians however, ignored them and the write off of loans and generation of bad loans in anticipation of possible write off offers from the politicians have become the order of the day. The general discipline expected from borrowers has been on the decline. and bad loans have on the increase affecting the interest rate, inflation, growth of the economy etc. This culture of offering freebies and write off of loans taken from banks need to be banned politically and Mr Modi alone can bring in such a transformation. This article should be an eye opener for that.
Dr.T.V.Gopalakrishnan
(This comment is in response to SAIyer's article on Times of India).
2 comments:
i agree with the views expressed by DrTVG. The point is does the RBI or NABARD object to this exercise .In the last write off, both RBI and NABARD were part of the exercise itself as Min of Finance , GOI was managing the write off scheme.
Pl make a reference to the history of RBI latest volume Dr I.G .Patel Governor had vehemently opposed to the write offs and had to literally fight the politicians on this issue. The banking systems' soundness depends on healthy lending and the terms and conditions entered into between the banks and borrowers clearly specify that loans have to be promptly repaid. For failure of crops and normal failures of business, there are crop insurance schemes and permissible write offs which the profitability of banks permit based on certain accounting standards. No doubt the crop insurance scheme needs a through review and revision to make it really attractive and workable. The political write offs have no sanction as per the banking and other laws. Such periodical write offs to suit the political convenience act as a moral hazard affecting the sound way of running the banks. It cannot stand any ethics or moral sanctions.
Post a Comment