Urgent
Initiatives in Infrastructure, Iron and Steel, Textiles, Aviation, and Mining
The RBI in its Financial Stability
Report, December, 2013 has identified five sectors – infrastructure, iron and
steel, textiles, aviation, and mining – as the stressed sectors. PSBs
have high exposures to the “industry” sector in general and to such “stressed”
sectors in particular. The survey mentions that the increase in NPAs of
banks is mainly accounted for by switchover to system-based identification of
NPAs by PSBs, slowdown of economic growth, and aggressive lending by banks in
the past, especially during good times. Asset quality in the banking
system has deteriorated in the post-crisis years and among banks groups, PSBs
had the highest level of stress in terms of NPAs and restructured
advances. Some recent initiatives taken by the government to address the
rising NPAs include:
Appointment of nodal
officers in banks for recovery at their head offices/zonal offices/for each
Debts Recovery Tribunal (DRT).
Thrust on recovery of loss assets by
banks and designating asset reconstruction companies (ARC) resolution agents of
banks.
Directing the state-level bankers’ committees to be proactive in
resolving issues with the state governments.
Sanction of fresh loans on the basis of
information sharing amongst banks.
Conducting
sector/activity-wise analysis of NPAs.
Close watch on NPAs by picking up early
warning signals and ensuring timely corrective steps by banks including early
detection of sign of distress, amendments in recovery laws and strengthening
of credit appraisal and post credit monitoring.
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