Allow the banks and the Reserve Bank to function professionally.

The banking system is in a mess and struggling to find ways and means to get out of the festering problem of non performing loans generated on a continuous basis due to lack of professionalism and political interference in its management. The so called autonomy has been elusive and the public sector banks survive because of budgetary support and subsidy provided by the depositors and other stake holders particularly good borrowers. The economy which is dependent on the banks for its growth is the worst sufferer and the loss suffered by it on a recurring basis is something beyond any calculation. However, the problem faced by the banks gets glossed over and no serious attempt has been made to introduce a lasting solution to make them healthy and self dependent for their survival. The solution to the menace of bad debts of banks lies within the   banks and the borrowers themselves by introducing a self correcting mechanism to liquidate the bad debts with the fines levied from bad borrowers and banks for their acts of undisciplined way of conducting the credit portfolio right from the sanction of loans to their liquidation. The problem of bad debts is definitely not an insurmountable one as is made out to be and this requires willingness and guts on the part of authorities to adopt the solution to discipline both the borrowers and banks without fear or favour. This much autonomy is essential for both  the banks and the  competent Reserver Bank to carry out their functions professionally without any sort of interference from the Government and politicians. 

Dr T V Gopalakrishnan

( This appears in the Hindu dated 15/2/16).