Late awakening by RBI

Apropos “RBI’s ‘compromise settlement’ norms, above board” (June 21), the RBI should blame none but itself for its June 8 Circular enlisting the latest ‘compromise settlement’ norms, which led to kicking up a lot of heat and dust.

However its belated FAQs makes amends by clarifying that the compromise settlement is no ‘sell-out’ to wilful defaulters.

Notably, FAQs also specify that a ‘cooling period’ of just one year for settled dues does not apply to wilful defaulters.

However, there may be many ‘ifs and buts’ and multiple operational complexities associated with such a scenario for the lenders.

Anyway, the editorial’s suggestion of a bank working out a settlement with the borrower, which will save time and save costs of legal proceedings – with higher recoveries vis-a-vis the latter, also merits consideration by the RBI.

Kumar Gupt

Panchkula (Haryana)

With reference to “The issue’s settled” (June 21), the clarifications provided through RBI’s FAQ cleared the uncertainties on this issue.

The decision on write offs in genuine defaults is critical, since it involves deep assessment of the value of surviving assets on the date of NPA, besides the repayment capacity of the borrower.

However, any error in the judgment of the deciding authority will be subject to scrutiny and approval before it is being communicated.

While the total revamp of the loan settlement process by RBI is praiseworthy, the routine political strategies like debt write off and providing relief to loan defaulters should be curbed.

Sitaram Popuri

Bengaluru

Aircraft orders

Apropos, ‘IndiGo order to buy 500 aircraft sends aviation, market watchers into frenzy’, IndiGo’s order of 500 single-aisle aircraft, coming on the back of Air India’s 470 aircraft order reflects the optimism that the two players have about India’s aviation market.

India is now ensconced in second place in the list of carriers having the largest aircraft order book, behind the US.

With annual passenger capacity in the six major metropolitan cities likely to nearly double to 420 million passengers by 2030, the two aircraft deals could well be another big moment for the country’s aviation sector.

But, there is concern that India’s domestic aviation market is heading in the direction of a duopoly that has market leader IndiGo and the Tata group airlines.

N Sadhasiva Reddy

Washington

China trade woes

With reference to the article ‘India’s trade dilemma with China’ (June 21), trade deficit with China has never been endemic to a particular nation. It is a concern across the globe. Both the US and the EU run huge trade deficits with China at around $360 billion each, ours is relatively modest one at $83 billion.

China’s earlier foray into “The great leap forward” failed because its macro view was undefined.

China developed small and medium enterprise-oriented industrial zones which played a critical role in facilitating the growth of Chinese SMEs from family operations catering to a local market to global powerhouses.

R Narayanan

Navi Mumbai