banks fund long-term assets with short-to-mid-term money. At present 10-year deposits are funding assets with a lifespan of over 30 years and any hiccup in the project is bound to create problem for any bank, she said. "You are front-loading repayments. In case there is any diversion on execution or on the fact that growth assumptions are not correct, then you will see stress appearing in the system," she said.
"We need to strengthen the working of all the spokes in the ecosystem, like an improvement in takeout financing and corporate bond market to tide over the issue," she added. Bhattacharya also said that although the existing laws are
adequate to tackle the bad assets/recovery issue, there is a need for institutions like the debt recovery tribunals to function in a timely manner as a precondition for faster resolution of recovery cases.
"Limited period should be given for the company. We get injunctions from various agencies and courts, which delay the recovery process," she said.
The government and the Reserve Bank have repeatedly expressed concern over the bad assets issue and also come up with a slew of changes in the regulations periodically to make it easier for banks to recover funds.
The latest includes a discussion paper by the RBI which is aimed at early resolution of NPAs and NPA management.