Friday, Mar 29, 2024 | Last Update : 02:46 AM IST

  Business   Urijit Patel’s pragmatism on bad loans to help banks

Urijit Patel’s pragmatism on bad loans to help banks

AGE CORRESPONDENT
Published : Oct 5, 2016, 6:53 am IST
Updated : Oct 5, 2016, 6:53 am IST

The Reserve Bank of India (RBI) on Tuesday said that it would deal firmly with the non-performing assets (NPAs) in the banking system to ensure that creditors rights are protected and economy doesn’t

PTI.jpg
 PTI.jpg

The Reserve Bank of India (RBI) on Tuesday said that it would deal firmly with the non-performing assets (NPAs) in the banking system to ensure that creditors rights are protected and economy doesn’t suffer due to lack of credit.

Since most of the NPAs are in sensitive sectors, the Reserve Bank however added that a pragmatic approach is required to resolve the stressed assets situation in the system.

“We will deal with the situation with firmness but also with pragmatism so that the economy does not feel any lack of credit to support the growth.

“But we must remember that the situation has not occurred overnight, so it will require skill and thoughtful endeavour to resolve the issue,” said Dr Urijit Patel, governor, RBI.

According to RBI, just five sectors accounted for 61 per cent of stressed assets in the banking sector. They are infrastructure, steel, textiles, power and telecom.

These sectors as per RBI are very important to the domestic growth and therefore require a pragmatic approach to resolve the issue.

While the banks have successfully managed to identify, record and report NPA’s, the Reserve Bank noted that its resolution has remained challenging.

“There are many reasons that lead to such situations. Now dealing with the banks to deal with such situations is of utmost importance to the country.

“We will move at various levels to address the situation. We are already working closely with the banks and the government to deal with some of the issues that emerge,” added Dr Patel.

Total stressed loans, including gross NPAs and restructured assets stood at over 12 per cent.