Letters to the Editor Dated February 16, 2026

Why It Matters

These insights signal potential shifts in banking liquidity rules, investor protection frameworks, and macro‑economic strategies, affecting lenders, asset managers, and policymakers across India.

Key Takeaways

• CD ratio insufficient for comprehensive bank health assessment
• RBI risk‑based insurance may raise costs for risky banks
• Abolishing CRR could free capital for lending
• InvIT reforms need leverage caps and transparent cash‑flow reporting
• Strengthening domestic resilience requires diversified trade and fiscal prudence

Pulse Analysis

Deposit mobilisation is becoming a litmus test for Indian banks as competition from mutual funds and bond markets intensifies. While the credit‑deposit (CD) ratio offers a snapshot of loan deployment, it omits liquidity buffers and the impact of the RBI’s newly introduced risk‑based deposit insurance premiums. Banks with higher risk profiles may see insurance costs rise, squeezing margins unless they can redeploy capital more efficiently. Abolishing the Cash Reserve Ratio (CRR) is floated as a bold remedy, potentially unlocking idle deposits for productive lending and enhancing overall financial sector competitiveness.

In the asset‑management arena, reforms to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) aim to deepen markets but carry hidden perils. Higher leverage thresholds and exposure to greenfield projects can amplify volatility, especially for retail investors lacking sophisticated risk assessment tools. Policymakers are urged to introduce clear borrowing caps, enforce rigorous cash‑flow transparency, and phase reforms gradually. Such safeguards would balance market expansion with investor confidence, preserving the integrity of India’s burgeoning alternative investment ecosystem.

Beyond sector‑specific issues, the letters call for a broader strategy to bolster domestic resilience amid a shifting global order. Diversified trade partnerships reduce dependence on any single market, while resilient supply chains mitigate geopolitical shocks. Coupled with disciplined fiscal management, these measures can cushion the economy against external volatility. Together, these recommendations underscore a holistic approach: strengthening banking liquidity, safeguarding investors, and reinforcing macro‑economic stability to navigate an increasingly uncertain international landscape.

Letters to the Editor dated February 16, 2026

Dated February 16, 2026 · Updated · February 16, 2026 at 09:39 PM.

Deposit mobilisation

This refers to “Bank health check beyond CD ratio” (February 16). The credit‑deposit (CD) ratio alone cannot be treated as a reliable health check of banks. While it reflects the proportion of deposits deployed as loans, it does not capture liquidity resilience and other vital parameters. Going forward, deposit mobilisation is set to become increasingly challenging as banks face stiff competition from mutual funds and the bond market. Since risk‑based deposit insurance premium norms are now introduced by the RBI, banks with higher risk profiles may face increased insurance costs. Although these premiums are paid by banks and not directly charged to depositors, competitive pressures could influence pricing strategies and margins.

In this evolving landscape, it is time to seriously consider abolishing the Cash Reserve Ratio (CRR) as it locks up a portion of deposits without earning returns, thereby constraining banks’ lending capacity and competitiveness.

— Srinivasan Velamur, Chennai

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Monitor riskier assets

Apropos “InvIT with care” (February 16), the editorial rightly underlines the need to keep investor interest at the centre of reforms relating to REITs and InvITs. While easing norms may deepen the market and improve liquidity, the risks from higher leverage and exposure to greenfield projects cannot be ignored. Retail investors, in particular, may not fully appreciate these risks. Regulatory changes should therefore proceed gradually, with clear caps on borrowing and strict disclosure standards. Any expansion into riskier assets must be matched by stronger monitoring and transparent reporting of cash flows.

— SM Jeeva, Chennai

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Domestic resilience

Apropos “New global order and economics” (February 16), the article raises an important concern about how economics must respond to a fragmented and uncertain world. If the rules‑based order is weakening, policy thinking cannot remain anchored in old assumptions of stability and free flows. Yet, a drift towards narrow national interest alone may deepen volatility. What is needed is a balanced approach. Policymakers should strengthen domestic resilience through diversified trade partnerships, robust supply chains and prudent fiscal management.

— A Myilsami, Coimbatore

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Corrigendum

The pocket cartoon by Ravikanth published on February 14 was a repeat of the one that appeared on February 6. The error is regretted.

Published on February 16, 2026