RBI has declared a war againt rising bad loans-ET
Reserve Bank of India deputy governor KC Chakrabarty said banks should cut all banking channels of willful defaulters to prevent rising loss of assets. Chakrabarty said banks should make use of the credit information bureau to share details of wilfuldefaulters and shun them entirely.
"Close all their bank accounts. Don't allow them to do any banking transaction," Chakrabarty said in Kolkata at an event organised by MCC Chamber of Commerce & Industry. RBI has declared a war against rising bad loans ever since Raghuram Rajan took charge as governor in early September.
Rajan said that no promoter has the "divine right" to abuse the banking system.
RBI's statistics show that net non-performing assets ratio (NPA) of all banks taken together risen to 1.68% of the total loan at the end of 2012-13, from 1.28% a year back.
Net NPA of the 26 public sector banks, including State Bank of India, rose to 2.02% during the year as compared to 1.53%.
Finance minister P Chidambaram strongly backed bankers who find themselves under a cloud through no fault of their own as loans increasingly turn bad amid a slowing of the economy.
The government will defend bank employees
from agencies such as the Central Vigilance
Commission and the Central Bureau of Investigation over loan approvals.
"As long as you take decisions based on appropriate
process and follow procedures and (these are) based
on facts available at that point of time and you exercise
best judgment we will defend you," Chidambaram said.
Net non-performing assets of 40 listed banks rose 38%in the first six months to Rs 1.28 lakh crore from a year earlier, according to data from NPAsource.com.
While the minister backed banks "holding hands" of
companies facing difficulties due to circumstances beyond
their control, wilful defaulters should not be spared, he said.
The central bank has prescribed strict guidelines for restructuring and Reserve Bank of India Govenor Raghuram Rajan has said that promoters “do not have a divine right” to continue after runningtheir businesses into the ground.
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