Friday, Sep 18, 2020 | Last Update : 11:23 PM IST

178th Day Of Lockdown

Maharashtra114584081235431351 Andhra Pradesh6014625080885177 Tamil Nadu5142084589008618 Karnataka4943563830777629 Uttar Pradesh3362942632884771 Delhi2347011981034877 West Bengal2155801870614183 Odisha167161133466722 Telangana1650031335551005 Bihar164224149722855 Assam150349121610528 Kerala12221687341490 Gujarat119088999083271 Rajasthan109088906851293 Haryana103773816901069 Madhya Pradesh97906743981877 Punjab90032658182646 Chhatisgarh7777541111628 Jharkhand6710052807590 Jammu and Kashmir5971138521951 Uttarakhand3713924810460 Goa2678320844327 Puducherry2142816253431 Tripura2069612956222 Himachal Pradesh11190691997 Chandigarh92566062106 Manipur8430653951 Arunachal Pradesh6851496713 Nagaland5306407910 Meghalaya4356234232 Sikkim2119178923 Mizoram15069490
  Opinion   Edit  27 Jan 2018  More power to banks

More power to banks

THE ASIAN AGE.
Published : Jan 27, 2018, 4:25 am IST
Updated : Jan 27, 2018, 4:25 am IST

However, the government would do well to provide funds predicated on the performance of the banks so that good money does not chase bad money.

The total recapitalisation planned is Rs 2,10,000 crore. (Photo: PTI)
 The total recapitalisation planned is Rs 2,10,000 crore. (Photo: PTI)

The banking sector is expected to be stronger in the new year with the news of stressed loans dipping from record highs for the first time and the government proposing to recapitalise banks by infusing `88,000 crore this fiscal. The total recapitalisation planned is `2,10,000 crore. This will not only enable banks to clean up their balance sheets but also increase their lending capacity, meet the Basel III regulatory capital norms and improve their financial risk profile. They will also have to put aside less funds to meet the stiff provisioning requirements for NPAs. The government’s seriousness in tackling the menace of NPAs is welcome and is underscored by its move to set up specialised monitoring agencies for loans above `250 crore and for tackling NPAs through sale of non-core assets.

However, the government would do well to provide funds predicated on the performance of the banks so that good money does not chase bad money. It is encouraging that under the Narendra Modi government the rampant practise of politicians directing banks to lend to their favourite businessmen has been curbed to a significant extent if not eradicated completely. Going forward, banks also need to hone their skills in assessing borrowers and in this they can take the assistance of institutions like the IDBI bank. There have been various mechanisms like sharing information about borrowers by banks as many of them borrow simultaneously from several banks; and having a risk profile of various borrowers to help banks in making decisions whilst dispensing loans. This skill is particularly needed when lending to corporates who borrow simultaneously from several banks. It is an irony that it is the bigger corporates that account for major loan defaults.

 

Tags: banking sector, modi government