Ensuring intermediation by banks in clean manner a challenge: Rajiv Kumar

NEW DELHI: Ensuring intermediation by financial institutions like banks and NBFCs in a clean manner is one of the major challenges faced by the Indian banking sector, Financial Services Secretary Rajiv Kumar said.

Making credit rating agencies more accountable is also another challenge, the secretary said at an event here.

He highlighted that the government has taken various efforts that have resulted in reduction of non-performing assets (NPAs) and an improvement in recovery.


Recoveries in the last four years have increased to Rs 3.62 lakh crore and Rs 1.2 lakh crore in the current fiscal, he said.

He also said that the government has infused Rs 3 lakh crore since March 2015 to improve the health of public sector banks saddled with non-performing assets (NPAs).

"The major challenges for the future for the banking sector remains ensuring intermediation by financial institutions is clean be it public sector banks, private sector or NBFC. How do we see that credit rating agencies also become far more accountable because their rating determines the flow of credit. It has impact on yields that's another area," Kumar said at an event here.

He further said that the synergy and scale is another area.

The government last month approved merger of Vijaya Bank and Dena Bank with Bank of Baroda to create the third largest lender after SBI and ICICI Bank.

The new will come into being from April 1, 2019.