RBI governor Raghuram Rajan said on Tuesday that the central bank was working with the government and the banks to ensure that stressed assets are recognised on a proactive basis and banks’ balance s
RBI governor Raghuram Rajan said on Tuesday that the central bank was working with the government and the banks to ensure that stressed assets are recognised on a proactive basis and banks’ balance sheets represent a true and fair picture and are adequately provisioned.
He said most banks were in favour of the March 2016 deadline for cleaning up their balance sheets as it would strengthen them and enable them to offer further loans.
Dr Rajan said: “We have given banks powers for a clean-up and now it’s the time to push more for recognition of NPAs.”
The estimates of NPAs being 17-18 per cent are bit on the high side, he said stressing that “we should be car-eful not to treat NPAs as total write-offs. Th-ey can change promoters and repay as the economy recovers.”
He allayed fears that banks would face an erosion in profits if they have to provision for all bad loans.
