Bank NPA levels on the decline: RBI governor Shaktikanta Das
On banking reforms, RBI governor Shaktikankta Das says RBI does not want to create a framework that throttles the functioning of banks
New Delhi: Reserve Bank of India (RBI) governor Shaktikanta Das on Monday expressed satisfaction over performance of the banking sector saying non-performing assets (NPAs) have declined, particulary that of public sector banks (PSU banks). The central bank has also initiated stakeholder consultation on banking reforms, said the governor.
“One issue which engages our attention on almost daily basis is the state of NPAs and health of public sector banks. Our both Financial Stability Report (FSR) and Trends & Progress in Indian Banking Report have given out figures and there is definitely an improvement noticed in the reduction of NPA levels of banks as a whole and public sector in particular,” said Das.
Various initiatives taken by the government have yielded results, with PSU bank NPAs declining by over ₹23,000 crore from a peak of ₹9.62 trillion in March 2018.
“There is considerable amount of improvements, which have to be sustained if banks have to fulfil their responsibility and if some of the banks have to become healthy,” Das said after meeting representatives of the micro, small and medium enterprises (MSMEs) sector in New Delhi.
According to the recently released Financial Stability Report report by RBI, stress tests suggest there would be further improvement in banks’ asset quality in the new year. In the baseline scenario, the gross NPA ratio might decline from 10.8% in September 2018 to 10.3% in March 2019 and 10.2% in September 2019, the report said. After a prolonged period of stress, the load of impaired assets was receding, with banks reporting their first half-yearly decline in gross NPA ratios since September 2015.
On banking reforms, Das said it is an important issue and that RBI has initiated consultation with various stakeholders as to what kind of reforms can be brought in. “We do not want to create a framework which imposes restriction or throttle the functioning of banks,” he said.
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