Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: No rating
Article rating: 5.0
Article rating: 5.0
Article rating: 5.0
Article rating: 5.0
Article rating: 5.0
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
Article rating: 5.0
Article rating: 3.3
Article rating: 5.0
RSS

News

Par panel questions RBI on failure to take preemptive action against bad loans

Author: PTI/Monday, August 27, 2018/Categories: Regulatory

Par panel questions RBI on failure to take preemptive action against bad loans

New Delhi, Aug 27 - A Parliamentary committee has questioned RBI for failing to take preemptive action in checking bad loans in the banking system prior to the Asset Quality Review undertaken in December 2015.

According to sources familiar with the report of the Standing Committee on Finance, RBI needs to find out as to why the early signals of stressed accounts were not captured before the AQR.

The report was adopted by the Committee headed by senior Congress leader M Veerappa Moily today and is likely to be placed in the Parliament in the Winter Session.

The panel, which includes former Prime Minister Manmohan Singh as a member, wanted to know the reasons of ever-greening of stressed accounts through restructuring schemes of the Reserve Bank of India.

The issue of rising non-performing assets (NPAs) or bad loans is a legacy issue and role of RBI has not been up to the mark, sources said.

NPAs in public sector banks (PSBs) increased by about Rs 6.2 lakh crore between March 2015 and March 2018.

This led to substantial provisioning of Rs 5.1 lakh crore, sources said quoting the report.

The report has also flagged the issue of low credit to GDP ratio in India which was 54.5% as on December 2017 as compared to 208.7%  for China, 170.5% for the UK and 152.2% for the USA.

"RBI should examine the asset to capital leverage ratio in other countries vis-à-vis India and, keeping in view India's relatively low credit-to-GDP ratio, identify ways to improve capital base of banks without constraining growth of, and equitable access to MSME, Agriculture and Retail segments, credit in India for meeting the needs of a  growing economy," the report has observed, according to the sources.

They said it has also noted that the various measures have led to transformative change in creditor-debtor relationship and clean, responsible banking.

They include transparent recognition of NPAs post-AQR, enhanced provisioning, massive recapitalisation, enactment of Insolvency and Bankruptcy Code, debarment of connected parties and examining of all NPA accounts exceeding Rs 50 crore from the angle of possible fraud.

Besides, steps like monitoring through specialised agencies in accounts above Rs 250 crore at PSBs, initiating the setting up of National Financial Reporting Authority, enactment of Fugitive Offenders Act, 2018, have also resulted in responsible banking.

Print Rate this article:
No rating

Number of views (201)/Comments (0)

rajyashree guha

PTI

Other posts by PTI
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free