RBI Deputy Governor says stress is relatively much less in priority sector accounts

Mumbai, Feb 24 (KNN) Addressing a Banking Summit in Mumbai recently, S. S. Mundra, Deputy Governor, RBI mentioned that in real world, NPAs arise due to  genuine reasons while wrong assumptions and inefficiencies and misdemeanour also cause failure of an funded asset.

Analysing the non – performance of the Small/ medium enterprises, Mundra identified lack of timely support and delayed payments as important triggers.

Providing a detailed data, Mundra mentioned in his address that creation of NPAs is not same across the sectors and contrary to the common perception, micro and small enterprises have the lowest NPA ratios among the industrial sector.

He has also shown that while public sector Banks  carried a total stressed asset  load of about 17 per cent of the total outstanding advances, as in September, 2015,  the respective figures are much lower at 6.7 per cent and 5.8 percent for the private sector Banks and foreign Banks.

Mundra’s data also shows that Banks in 2015 restored about 45 per cent of the total stressed asset against writing off about 22 per cent of them.

Dwelling on the subject of Asset Resolution & Managing NPAs - What, Why and How, RBI Deputy Governor mentioned that External Environment is a major cause of shooting NPAs of Banks.

He mentioned Global slowdown, Fall in domestic demand, Policy logjam & Disputed Contracts played important roles in non- performance of assets.

At the same time Mundra also counted Governance deficit, poor credit appraisal and weak risk management by the Banks for failure of loan accounts.

Coming down heavily on the corporate sector RBI Deputy Governor mentioned Complex holding companies, High leverage; and unhedged exposures among major reasons for failure of big corporate accounts.

RBI Deputy Governor commented that while promoters must recognize their failure and cooperate genuine innovation is important in banking. (KNN/ DB)