Skip to main content

RBI promises more effective steps to tackle NPA pain

By

The Reserve Bank of India (RBI) on Thursday said even though there had beenafew positives on the bad loans front, the current level of dud loan resolution was untenable as there had been a deterioration in non performing assets (NPA), and promised new measures to tackle the pain. “The present level of NPA resolution is  untenable,” Governor Urjit Patel said while addressing the media after announcing the first bimonthly policy for financial year 201718.
Deputy Governor S S Mundra, who heads the banking department, chipped in saying “we are yet to get the final result of Q4 which has just ended.
But based on the figures that were available for the December quarter, the various indicators of the stressed assets have further deteriorated during this period.” He  said the positives achieved by the banks includeaslowdown in the accretion of fresh NPAs and stable provision coverage ratios.
The former commercial banker cautioned that the current situation will put pressure on capital for the banks, especially for the staterun ones.
As resolution of the stress comes into the foreground, Mundra said there wasaneed to understand that there cannot bea “one size fits all” approach and advocated  adoption of various tools.
He reiterated RBI was also in talks with the government on how to improve the existing frameworks, and the discussions were centred on how to act faster on joint  lenders´ forum decisions, enhance the number and role of oversight committees, or whether to look at sector or sizespecific problems while tackling resolution.
RBI has introduced a slew of instruments to tackle the NPA menace, which had crossed 9.5 per cent of the system or Rs 14 lakh crore as of December 2016, including strategic debt restructuring, 5/25 restructuring, joint lenders´ forum and Prompt Corrective Action (PCA), which will be out by end April.
Even as speculation rages if RBI will introduce a new instrument or tweak an existing one, Mundra said there can bea “relook” at the existing instruments.
“The message that we are trying to give is that all these instruments are meant for resolution inaserious sense and not for postponement of the problem.
That will be the focus going forward,” he said.
In the policy document, RBI also saidarevised PCA framework will be introduced for banks in mid April.
RBI also increased minimum capital requirement for asset reconstruction companies to Rs 100 crore from Rs 2 crore earlier.
RBI also announced it will be tweaking the capital requirements for partial credit enhancement framework.
It has also decided not to activate the counter cyclical capital buffer at this point of time.
The Business Standard New Delhi, 07th April 2017

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more