On a day when the RBI’s monetary policy committee decided to leave rates unchanged to support economic growth, senior officials of the central bank said they are closely monitoring the increase in stressed assets in the retail and MSME segments. “We are closely monitoring the movement of any kind of stress in the retail and MSME segment. Yes, there is visibility of a little bit stress from the past data but definitely not alarming and constantly we are engaged with regulated entities particularly the outlier banks and NBFCs,” said RBI Deputy Governor MK Jain, while reiterating that the banking sector is in a better position today than the pre-pandemic levels. State Bank of India, while announcing its quarterly results, had said last week that slippages came in from the small and medium enterprises (SMEs) and home loan segments. The SME sector is little sticky, but the bank is seeing better traction for restructurings that are coming from the sector, it said. The central bank also said it was closely looking at cooperative banks which have seen multiple failures and breach of corporate governance in recent times. RBI Deputy Governor Rajeshwar Rao said, “We are closely monitoring the position as far as the urban cooperative banks are concerned. There are concerns over the failure of some of the urban cooperative banks. We are also waiting for the recommendations of the expert committee headed by former RBI Deputy Governor Vishwanathan. The report is expected shortly and there would be some recommendations that will guide us with the way forward.” Earlier this year, the RBI had set up the committee with the mandate of reviewing the current regulatory/supervisory approach and recommending measures to strengthen the sector after the amendments to the Banking Regulation Act, 1949 which gave the central bank more powers over cooperative lenders.
