RBI and banks brainstorm on NPAs

Reserve Bank of India (RBI) Deputy Governors Viral Acharya and NS Vishwanathan met bank chiefs to discuss the top 50 stressed accounts.

By: ENS Economic Bureau | Mumbai | Updated: May 31, 2017 6:41 pm
bad loans, RBI, reserve bank of india, RBI bad loans, NPAs, non performing assets, Arun Jaitley, Finance minister, Jaitley, bad debt, bankruptcy, indian express, india news, business news In early May, the President had approved an ordinance amending the Banking Regulation (BR) Act, 1949, giving more powers to the RBI to deal with non-performing assets (NPAs).

With the government and the central bank both focused on resolving the problem of bad loans on banks’ books, Reserve Bank of India (RBI) Deputy Governors Viral Acharya and NS Vishwanathan on Tuesday met bank chiefs to discuss the top 50 stressed accounts.

In early May, the President had approved an ordinance amending the Banking Regulation (BR) Act, 1949,
giving more powers to the RBI to deal with non-performing assets (NPAs). Earlier, the Union Cabinet had approved a proposal to amend Section 35 of the BR Act.

Subsequently, the central bank has been meeting stakeholders to deliberate on the way forward. Tuesday’s meeting was attended by the heads of nearly 10 banks. Among those present were Uday Kotak, executive vice-chairman, Kotak Mahindra Bank, Chanda Kochhar, CEO and MD, ICICI Bank, Shikha Sharma, CEO and MD, Axis Bank, Aditya Puri, MD, HDFC Bank, Zarin Daruwala, CEO and MD, Standard Chartered Bank and B Sriram, managing director, State Bank of India (SBI).

Last week, the central bank had said “the proper exercise of the enhanced empowerment would require coordination with and cooperation from several stakeholders including banks, ARCs, rating agencies, IBBI and PE firms, to which end the Reserve Bank of India would be holding meetings in the near future with these stakeholders”. Since then, it has met asset reconstruction companies (ARCs) and credit rating agencies.

The central bank has said it plans to expand the strength and scope of the oversight committees (OC). Currently, there is just one OC that comprises just two members and vets only S4A (scheme for sustainable structuring of stressed assets) proposals. The expanded OC will also vet other debt recast mechanisms.

Meanwhile, rating agency S&P on Tuesday said that credit profiles of Indian banks were unlikely to improve over the next 12 months. In a report titled “No Quick Cure For India’s Banking Blues”, the agency estimated that the banking sector’s total stressed assets will increase to 13-15 per cent of total loans by the end of March 2018. FE

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