Don’t want repeat of high NPA levels of the past: Das

Reserve Bank of India Governor Shaktikanta Das (In picture) on Wednesday said businesses impacted by Covid will be assisted to come back to normalcy but the primary concern of banks will be to protect depositors’ money because they run into crores of them while borrowers are only a few lakhs.

He said RBI also does not want a repeat of the situation, which India experienced four five years ago where the non-performing assets (NPA) levels of banks had gone up very steeply.

“The primary concern in the banking system is the protection of depositors’ money. Ultimately, it is the depositors’ money that is being lent out,” governor Das said in his address in the industry chamber Ficci’s event.

“Depositors run into crores in numbers, whereas borrowers could be in lakhs. There are small depositors, middle class depositors, there are retired people who depend on bank deposits. So, the interests of depositors have to be protected. Also, the aspect of financial stability of the banking sector needs to be kept in mind,” Das said, assuring sectors suffering due to the pandemic that they will get all help from banks.

On the economic recovery, Das said while there were some indications of stabilisation of economic activity in the second quarter, the recovery was not yet fully entrenched.

“The recovery is, however, not yet fully entrenched and moreover, in some sectors, upticks in June and July appear to be levelling off. By all indications, the recovery is likely to be gradual as efforts towards reopening of the economy are confronted with rising infections,” he said.

Das said focus was needed on five key areas to assist a revival of the economy in the coming few months -- human capital with specific emphasis on education and health; productivity; exports, to increase India’s role in the global value chain; tourism and food processing associated productivity areas.