Highlighting its growing discomfort with rising bad loans, hovering at record highs, the Reserve Bank of India (RBI) in its report on “Trends and Progress of Banking in India - 2012-13” underscored that it would focus on the monitoring of banks' asset quality and will help improve the poor debt recovery process in the country. In respect to this, country’s central bank has directed banks to strengthen their due diligence, credit appraisal and post sanction loan monitoring systems to minimize and mitigate the problems of increasing non-performing assets (NPAs).
As per the report, Gross NPAs as percent of gross advances for scheduled commercial banks stood at 3.6% as at March 2013 as against 3.1% previous fiscal, while Net NPAs as percent of net advances for banks stood at 1.7% in FY13, as against 1.3% previous year. It noted that public sector banks had highest amount of bad loans at Rs 1,65,000 crore followed by private sector banks at Rs 21,000 crore and foreign bank at Rs 7,900 crore.
Pointing this, India’s Apex Bank called for better legal system in place for helping bank recover public funds from defaulters. It was of the view that the bank’s recovery should be focused on efficiency and fairness- preserving the value of the underlying assets and jobs where possible, even while redeploying unviable assets to new uses and compensating employees fairly.
The other area that the central bank voiced concern was the deteriorating capital position of public sector banks in view of the migrating to Basel-III framework, given the fiscal implication of capital infusion in these banks.
As per the report, Gross NPAs as percent of gross advances for scheduled commercial banks stood at 3.6% as at March 2013 as against 3.1% previous fiscal, while Net NPAs as percent of net advances for banks stood at 1.7% in FY13, as against 1.3% previous year. It noted that public sector banks had highest amount of bad loans at Rs 1,65,000 crore followed by private sector banks at Rs 21,000 crore and foreign bank at Rs 7,900 crore.
Pointing this, India’s Apex Bank called for better legal system in place for helping bank recover public funds from defaulters. It was of the view that the bank’s recovery should be focused on efficiency and fairness- preserving the value of the underlying assets and jobs where possible, even while redeploying unviable assets to new uses and compensating employees fairly.
The other area that the central bank voiced concern was the deteriorating capital position of public sector banks in view of the migrating to Basel-III framework, given the fiscal implication of capital infusion in these banks.
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