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.