This is with reference to “Banks approach RBI
to stay out of PCA” (May 30). It is reported that the banks likely to come under the prompt corrective action
(PCA) framework would request the Reserve Bank of India
(RBI) to defer this till the year end. Acceding to this request is not advisable as it will merely delay the process of correction/reform and would go against the principles of transparency. Agreeing to the request would amount to kicking the can down the road.
The various recast schemes introduced by the Reserve Bank of India
like SDR, S4A and 5/25 only delayed the process of recognising the non-performing assets without any commensurate benefit. Subsequently, the asset quality review (AQR), termination of the recast schemes and bringing the problematic banks under PCA were/are laudable steps that have brought transparency about the actual NPAs
and financial health of the concerned banks and hopefully will trigger course correction and reforms in the public sector banks
Any dilution or deviation will result in disservice to the depositors of these banks specifically and to the public in general. Rather than asking for relaxations, comprehensive reforms should be carried out in the PSBs.
can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 E-mail: email@example.com
All letters must have a postal address and telephone number