This refers to “Reserve Bank bans 0% interest schemes” ( Business Line , September 26). This is a welcome move that was long overdue. Deregulation and liberalisation in India have been variously misunderstood as freedom to do whatever you want, so long as you remain within the contours of established law, or, if you are willing to pay penalties when caught.
The RBI’s present guidance should be taken as indicative of the regulator’s concern to protect public interest. The Government and corporates should review the tax and pricing policy to bring in transparency. The review should cover tax exemptions, subsidies and various ‘offers’ including discounts and prizes.
Bank defaults
The theme of “Default and be merry” ( Business Line , September 25) is that the banking regulator (the Reserve Bank of India) should do this and that with regard to the dues to commercial banks, especially the public sector banks. The problem is the State governments and the Centre are quite aware of the weak position of the RBI. What can the RBI do when a department of a State or a Central Government backtracks on its guarantee?
The correspondence between the RBI and the concerned department would only add to the delay. Borrowers are also quite aware of the weak legal system even with regard to bank cases. Even the courts have not been treating loan default cases on a priority basis. If ever the banks have been able to recover the dues in certain cases, it is because of the ethical nature of the borrower and definitely not due to the banks’ efforts!
K. V. Rao
Bangalore