RBI, banks to debate rising bad loans

RBI, banks to debate rising bad loans

Worried over rising bad loans in certain sectors, RBI said it will discuss the issue with banks soon.

“Stress sectors are well known, the issues which are there. But we don’t think there is a great concern as of now,” Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty said on the sidelines of an event here.

“But any how we are going to discuss (NPA issue) with the banks in the coming day. We are going to meet banks during this month or first week of March,” he said.

Banking sector, however, has some difficulty with regard to loans to aviation sector. Banks are struggling to recover Rs 19,000 crore from the ailing national carrier Air India .

One of the three proposals floated to restructure the airline includes converting the outstanding debt into government bonds which could be transfered to the banks’ SLR portfolio. Loan given to private carrier Kingfisher has also turned NPA.

On review of supervisory policies, procedures and processes by a RBI panel, he said the report is expected to be submitted by July. The committee headed by Chakrabarty is reviewing the existing supervisory processes in respect to commercial banks in India.

The terms of reference of the committee include review of the approach to supervision, review of the extant onsite supervisory examination and offsite supervisory methods besides review of the adequacy of prudential supervisory guidelines and supervisory review process. Besides, it is also examining the extant methods for consolidated supervision and assessing the adequacy of the institutional structure for carrying out supervisory function.

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