Rising CDR cases are a concern: DK Mittal, Former Banking Secretary
In an interview with ET Now, DK Mittal, FormerBanking Secretary, shares his views on the mounting NPAs in public sector banks. Excerpts:
What is your take on the Finance Ministry's differences with the RBI on the interest rate trajectory?
A difference in opinion does not mean a confrontation all the time. The government and the RBI could have different perspective. The focus of the two could be quite different.
The government would be looking at larger perspective from the development side and the regulator's side, but the regulator primary tends to look at the regulatory side which is very correct. Now these two different opinions are synergised when we sit together.
So, it is not that RBI and the government are at loggerheads. As Governor Reddy has said that if the RBI and the government are working together, then the RBI is superfluous and if RBI is always having confrontation with the government, that is obnoxious. It is appropriately said.
There is a concern on the mounting NPAs as far as public sector banks are concerned. Do you think this is a cause of concern to the Finance Ministry as well?
We as a majority stakeholder in the public sector banks are concerned about the rising NPAs and we have been informally discussing with the banks and formally discussing with the banks in the boards what strategy need to be adopted.
The rising CDR cases which are coming, many of them are genuine, but many of them as we believe are not so genuine. So that also is a concern which has been flagged to the banks and CDR set has been taking care of that. Unless the overall economy picks up, there is going to be pressure on the asset quality of all banks, including private sector banks. I also like to flag that it is the public sector banks which have lent large funds for infrastructure projects.
The role or the share of public sector banks in such funding is substantial and therefore when these sectors of the economy are under stress, certainly there will be huge pressures on these banks on the NPA side also.
We have mining for example in the stress, steel and coal sector under stress. So all these sectors which are stuck up for one reason or the other and where economic activity is not happening, they are causing stress to the banking sector.
But do you think at some point in time, there has been general going away from the proper due diligence that banks have perhaps not conducted in lending to these sectors or specific companies that have led to a rise in the NPAs?
Multiple lending arrangements need to improve further. Banks need to share a lot of information among them. The repayment coming from the borrowers had to be pooled together so that they do not play one bank against the other. The second priority is there has to be more specialisation in banks for looking at large lending.
It is not a small lending to SME, but we are lending a few thousand crores to any institution, then the appraisal quality has to go up. That point has been recognised by all banks and they are taking care of that
Fri, Feb 01, 2013 at 19:27
Govt will meet disinvestment target of Rs 30k cr: DK Mittal
DK Mittal, secretary of financial services, GoI, shares his view on banking regulation amendment bill. He says that the RBI being the regulator will be the notifying authority, and they will issue the guidelines for the banking regulation amendment bill very shortly maybe in next two weeks time.
DK Mittal, secretary of financial services, GoI, shares his view on banking regulation amendment bill. He says that the RBI being the regulator will be the notifying authority, and they will issue the guidelines for the banking regulation amendment bill very shortly maybe in next two weeks time.
On asking the RBI to drop the condition that restricts promoters with an exposure to real estate and stock broking, he says that India is not a capital surplus country. If we are asking to put in Rs 500 crore, then how many entities would be able pull in Rs 500 crore.
On the government's Rs 30,000 crore disinvesment target, Mittal opines he is confident of the Government meeting the target. "I can say very firmly that the target of Rs 30,000 crore shall be met. With this target being met, the Budget promise which has been made before the parliament should be complied with," he adds.
State IAS officer is new Financial Services secy
Senior IAS officer Rajiv Takru took charge as Secretary in the Department of Financial Services on Friday. A 1979 batch Gujarat cadre IAS officer, Takru was previously Prasar Bharti CEO and replaced D K Mittal, who retired yesterday. Takru, who joins the Finance Ministry ahead of the Budget for 2013-14 to be presented later this month, is scheduled meet heads of public sector bankers on February 5. Prior to this, he was Additional Secretary and Financial Adviser in the Ministry of Health and Family Welfare.
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