RBI wants banks to gear up against bad loans
Reserve Bank on Friday asked banks to guard against deteriorating credit quality due to global financial meltdown and its spill-over impact on Indian market.
By PTI |
MUMBAI: The Reserve Bank on Friday asked banks to guard against deteriorating credit quality due to the global financial meltdown and its spill-over impact on Indian market.
"It is likely, during the difficult times, that assets can be impaired. Banks can turn risk aversive. Preventing impairment down the road and safeguarding the gains of last few years' improvement in asset quality should be the cardinal principle of this period," RBI Deputy Governor Usha Thorat said at a seminar here.
Indian banks had witnessed a sharp increase in their Non- Performing Assets (NPAs) in the last one year with deepening of the global financial crisis, Thorat said.
Textile, garments, auto and pharma sectors have witnessed rising defaults following the credit crunch.
While restructuring loans of micro, small and medium enterprises, banks should ensure viability of the proposals, Thorat said, adding "It is important for banks to establish the viablity while restructuring the loans".
Restructuring should be seen as preserving the value of assets by providing timely assistance and it was not to make unviable and impaired assets, Thorat said.
"It is likely, during the difficult times, that assets can be impaired. Banks can turn risk aversive. Preventing impairment down the road and safeguarding the gains of last few years' improvement in asset quality should be the cardinal principle of this period," RBI Deputy Governor Usha Thorat said at a seminar here.
Indian banks had witnessed a sharp increase in their Non- Performing Assets (NPAs) in the last one year with deepening of the global financial crisis, Thorat said.
Textile, garments, auto and pharma sectors have witnessed rising defaults following the credit crunch.
While restructuring loans of micro, small and medium enterprises, banks should ensure viability of the proposals, Thorat said, adding "It is important for banks to establish the viablity while restructuring the loans".
Restructuring should be seen as preserving the value of assets by providing timely assistance and it was not to make unviable and impaired assets, Thorat said.
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