Fuzzy matter Realising Modi’s ‘vision’
With reference to Debashis Basu’s article, “Home loans loot: Whose side is RBI on” (August 21), I would like to add that it is not just that banks are not reducing their marginal cost of funds-based lending rate (MCLR) or passing on the benefit for loans. I experienced a strange case of one of the foreign banks (HSBC) increasing the MCLR immediately after the first three months, and that too by 25 basis points.
This is a quarterly reset based on MCLR, but in the last quarter, I cannot understand if the cost of funds for the bank or in the general economy has gone up. To my mind it is stable or a declining bias. Even then, immediately after the first three months (the loan was sanctioned in May), the bank is increasing the MCLR. I think they are probably changing the spread for home loans with MCLR for new customers, otherwise, they would lose the market share.
To my questions, I haven’t got any answers. I don’t know if there is an option to complain to the Reserve Bank of India (RBI) about these practices. Even if I complain, will the RBI be bothered about the fact that banks are not just refusing to reduce interest rates, but are also conveniently increasing the rates too?
Somy Thomas via email resolution of bad loans is crucial, the progress in doing so by banks is sluggish. Present measures and support systems need to function in sync and swiftly.
Without need-based infusion of capital, government-owned banks wouldn’t be able to lend and credit expansion would be negligible. Restricted lending of banks on account of prompt corrective actions invoked by the banking regulator is hampering the growth of big-ticket credit expansion. The tendency of banks to refrain from taking lending decisions needs to be discouraged. Even though recapitalisation of banks is at the cost of the exchequer, the government, being a major stakeholder, has to do that to ensure the required capital adequacy of banks.
The role of political leaders in contributing to the bad loans situation should not be undermined. Political interference negatively impacts credit decisions of bankers. They should take With reference to Sanjeeb Mukherjee’s report, “CEOs raise questions over multiplicity of regulators” (August 22), among living world leaders, Prime Minister Narendra Modi has understood the value of listening and “making others listen” to governance. He gives his audience enough opportunity to interact, respond and deliberate on policies and issues concerning the everyday life of citizens as much as the nation’s concerns about economic growth and defence preparedness.
Mann Ki Baat and quick responses from the Prime Minister’s Office to any queries from citizens reassures them that airing of grievances is not a one-way traffic.
Seminars and interactions like those being held under the auspices of the NITI Aayog serve more purposes than their declared objectives. Political leadership, the media and analysts need to cover the impact of such initiatives. This is necessary to make the Modi vision of cooperative federalism a reality.
M G Warrier Mumbai