RBI Governor against banks seeking artificial fixes for NPAs

  RBI Governor against banks seeking artificial fixes for NPAs

STRONGLY disapproving requests for "regulatory forbearance" in cases of asset quality stress made by lenders and corporates. Reserve Bank Governor Raghuram Rajan told bankers on Friday not to find "artificial fixes" for the problem. Rajan said the RBI had received requests from lenders and corporates requesting for postponing recognition of stressed assets as "had loans", even (thought it may not have been serviced for three years. "Let's not try to find artificial fixes. Let us go about fixing it the right way. Postponing recognition will mil help. If it is not paid today, it won't get paid tomorrow." Rajan said, adding that the best was out was to make sure that the asset itself becomes viable. It may be noted that NPAs of banks touched an all-time high of over 5 per cent as of the December quarter, while FY 14 saw banks recasting as many as Rs I trillion worth of loans, taking the overall corporate debt restructuring loan book to close to Rs 4 trillion. NPAs and CDR loans put together is over 10 per cent of the system as on last December.

Posted in: News 2014