INSUBCONTINENT EXCLUSIVE:
I thought about it over the years, as it left an indelible impression on me
borrows money from banks and runs its businesses
Likewise, banks are in the business of lending money on interest
The business community, trading/manufacturing/services, etc, as well as banks incur expenses and part of their income is paid to the
The rest is profit and good for the overall economy.
The implied partnership is clear
The business community generates income, incurs expenses, including payment of interest to banks and then pays taxes
Likewise, banks earn net interest income on the money they lend
This three-legged stool needs to stay balanced
at all times, to avoid the collapse of the economy as a whole
In essence, if the business community is required to pay interest during a force majeure lockdown (such as Covid-19), and is not given
forbearance of a few months to ensure their revival, it will result in a lot of litigation.
Businesses and tax payers are a small percentage
of the total population of the country
What we perhaps need to underscore is the need to address the concern of the small and medium business/trading/manufacturing/service
community whose cash flow cannot really function beyond a three-month period with no revenue/income, and they are perhaps the backbone of
the economy and generate much needed employment and livelihoods for many
In a statesman like fashion, we need to carefully balance the needs of businesses with that of the financial system and sound monetary and
fiscal policy by the banks and government to keep the golden goose from losing its fertility.
(Rajesh Narain Gupta, managing partner, and
Sanjay Khanna, advisor, SNG - Partners)