This refers to to your Editorial PNB Scam should not stop trade Finance (ET dt 23/2/2018). The fact that Nirad Modi scam did happen because of laxity in the checks and balances on the operation of loan accounts particularly misuse/ abuse of Letters of Undertaking should not lead to stoppage of facilities facilitating trade finance and development of international trade. As it is, the public sector banks are struggling to survive because of non expansion of credit and high cost of funds thanks to unprecedented staggering of bad loans, the stoppage of non fund based limits like letters of undertaking for some operational lapse like reconciliation of accounts between banks, exclusion of transactions from core banking and avoiding swift guidelines to help some unscrupulous borrowers can only add to the miseries of PSBs affecting adversely international trade and commerce. No doubt the PNB scam has necessitated the need to tighten the regulation and supervision of banks both internal and external which unfortunately got relaxed under the guise of liberalization and cost cutting, but this should not take away the role of banks in providing the much needed support to the economy at this crucial time when global expectations are very high and opportunities are plenty to perform well and emerge as the fast growing economy. Time has really come to live up to the promise of minimum Government and maximum Governance and this requires an overhaul on the role of RBI, Banks ‘Board Bureau and PSBs’ Boards. Earlier the Government keeps away from banking the better for the Economy. Ease of doing business should really ease but should not result in frauds and scams for want of adequate checks and balances in banks day to day operations.
Dr T V Gopalakrishnan
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