Health of banking sector shows the state of economy: UBI chief

He said, "a number of industries that went for expansion in the last four years have been “caught in the trough” as they are now facing problems of “cash-flows.”.

By: Express News Service | Gandhinagar | Published: April 10, 2016 1:57 am

Stating that the health of banking sector is the “reflection of the economy”, Arun Tiwari, chairman and managing director of Union Bank of India, on Saturday said that a number of industries that went for expansion in the last four years have been “caught in the trough” as they are now facing problems of “cash-flows.”.

“Did we know four years ago that the economy will not do well? Please do not forget that banking is a reflection of the economy. If the economy is not doing well then the banking also cannot do well….We did not know this four years ago, and today we are faced with NPAs,” said Tiwari on the sidelines of the second convocation ceremony of Gujarat Forensic Sciences University.

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On the issue of rising Non Performing Assets within UBI the official said 58-60 percent of the NPAs are in the core sector of steel, power, road and cement. “If the economy is growing at 7.5 percent, then the core sector has to be fixed. It is not that there is a problem with the industry. The issue is of cash-flow. A lot of industries went for expansion in the last four years. Then the recession came and they have been caught in the trough.”

The CMD also felt that the proposed Bankruptcy Bill — expected to be introduced in the Parliament — will speed up the recovery process. “Once the person feels that he cannot shake off the recovery process, then he comes to the table for talks,” Tiwari said, when asked how banks proposed to make recovery easier in wake of the controversy surrounding liquor baron Vijay Mallya.

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