Business
RBI cautions lenders on bad debt
Mumbai, Feb 9
The Reserve Bank of India (RBI)
Monday said it has cautioned lenders on the need to improve asset
quality and curtail non-performing assets (NPAs) which have increased in
the recent past.
Speaking to reporters here, RBI's Deputy
Governor R. Gandhi said asset quality has always been a concern
following the global financial crisis.
"We have been
continuously cautioning banks about slippage of stressed assets and we
have been guiding banks in recovering," Gandhi said.
The
prolonged and steep economic downturn, accompanied by high interest
rates, has led to a sharp deterioration in asset quality for the banking
sector and increased the pressure of NPAs.
The percentage of
gross non-performing assets (GNPAs) for the banking sector is expected
to worsen from 3.9 percent of advances in fiscal 2013-14 to about 4-4.2
percent in 2014-15, Moody's analyst ICRA has said in a report.
Bad
and restructured loans crossed 10 percent of all loans in mid-fiscal
2013-14 and are expected to touch the 15 percent mark by the end of the
financial year 2014-15.
During the April-December period last
year, the banks had recovered Rs.18,933 crore, which is only about 20
percent of the total non-performing assets of about Rs.192,000 crore in
the banking system.
Earlier, Finance Minister Arun Jaitley had
said that banks are taking a number of steps against wilful defaulters
to recover loans as there has been a major spurt in NPAs.
"It is
normal for the banks to have 2-3 percent of NPA. But in the last 2-3
years, the NPA has increased substantially and gone up to 6 percent.
Stress assets have also increased," Jaitley had told the Lok Sabha
during the question hour.