RBI Governor Raghuram Rajan has raised optimism by some fine tuning of the monetary policy, but it still has long way to go. The entry of foreign banks will infuse foreign capital which will help easing balance of payment on current account problem. It will also improve the competitiveness of our banks. Rajan?s main hurdle is to improve efficiency of public sector banks. Although Prime Minister Manmohan Singh exposed the real health of PSBs by introducing the concept of non-performing assets, but he could not stop their generation. It has been often alleged that NPA is the route through which big industrial houses siphon common men?s savings with the help of unscrupulous officials and politicians. Other weak sectors are non-banking financial companies and co-operative banks. Rajan will need strong political support to bring about the reforms that he wants to. Alongside, we require strong commercial banks to compete with multinational banks for which the amalgamation of PSBs is necessary. Politicised trade unions also might stand in his way.
MK Mahapatra
Pune
Crimped India Inc
Apropos of the report “India Inc’s margins crimped, interest costs eat into profits” (FE, October 28), companies should find means like bringing administrative reforms, mass production, etc, to cut cost rather than depending on rates alone.
Jacob Sahayam
Thiruvananthapuram