Just retired RBI governor Raghuram Rajan's clean-up of more than $100 billion of stressed assets on the books of banks came in for praise from President Pranab Mukherjee who felt rising NPAs are not a desirable situation.
Just retired RBI governor Raghuram Rajan’s clean-up of more than $100 billion of stressed assets on the books of banks came in for praise from President Pranab Mukherjee who felt rising NPAs are not a desirable situation.
“Of course more than often you listen to NPAs of banking system, which is no doubt a matter of concern. And governor of RBI who has just retired, Rajan, took many appropriate steps to put the system in the right direction,” he said at the centenary celebrations of Karur Vysya Bank in Chennai.
The stressed advances to gross advances of scheduled commercial banks have increased from 10.90% in March 2015 to 11.40% in March 2016, he said, adding the aggregate provisions for NPAs has increased from R73,887 crore to R1,70,630 crore. Also, net profits of the banks have come down from R79,465 crore in March 2015 to R32,285 crore in March 2016, he said.
Rising NPAs is “not a desirable situation”, he said, adding those resources must be available for commercial disbursement.
Rajan, who completed his three-year term as governor of the Reserve Bank of India on September 4, had forced banks to recognise the true state of their bad loans. This culminated in a six-month asset-quality review that led to banks reporting a surge in bad-debt disclosures and higher losses this year.
Mukherjee said Indian economy and its banking system has done reasonable well considering “indiscretion of a private bank (abroad) could create such an international financial crisis from which world is yet to recover”.
Mukherjee also hoped the government will set up a Goods and Services Tax (GST) Council soon and reduce cascading effect of indirect taxes. The GST, which will transform India’s $2 trillion economy and 1.3 billion consumers into a single market for the first time, has been ratified by 19-20 states after Parliament nod last month, thereby qualifying to Presidential assent, he said.