The problem of mounting NPAs came into existence due to delayed response from banks, said SBI Chairman. The bankers, government, corporates and even judiciary played a role in the stressed asset issues, Rajnish Kumar, SBI Chairman told CNBC TV18. Even though banks will trust the borrowers, credit will be issued after carrying out proper verification, he said.
The banks will also have to ensure that equity promised by the company promoters is available. In addition, banks need to make sure that the loans are used for purpose they have been extended for, he told ET Now.
Talking about IBC, he said that IBC has been a good step that instilled fear in mind of promoters of losing company. An awareness among borrowers due to IBC is changing the way business is being done, he said. The bankers need to move from balance sheet-based lending to cash flow-based lending, he added. A certain decline has been observed in bad loans, he also said.
Rajiv Kumar also said that Sashakt is shaping up well and the country is moving towards a national AMC. He also told CNBC TV18 that ownership in private banks needs to be more diversified.
Rajnish Kumar also said that a few sectors are showing a turnaround because of government’s efforts. Since the power sector is stressed, there is a need to fix the power sector for the continued growth of the economy, he said.