INSUBCONTINENT EXCLUSIVE:
recovery" as afflicting non-performing assets recede, but state-run lenders need reforms in governance, Reserve Bank of India (RBI) Governor
Shaktikanta Das said on Monday
The weaker ones among public sector banks need to be supported through recapitalisation, governor said in his foreword to RBI's half-yearly
financial stability report (FSR)
"After a prolonged period of stress, banking sector appears to be on course to recovery as load of impaired assets recedes," said Mr Das,
who took charge earlier this month after sudden exit of Urjit Patel.He pointed out that period till September has seen a decline in gross
NPA ratios -- first such dip in three years -- and also pointed out at improving provision coverage ratio, which is ability of a bank to
withstand stress, as a positive
According to FSR, gross NPAs ratio declined to 10.8 per cent in September 2018 from 11.5 per cent in March 2018, while for state-run
on NPA front, which started with accelerated recognition through asset quality review, Mr Das said there is a need for operational
to be buttressed with substantive reforms in governance and oversight regime, supported by recapitalisation of weak PSBs," he said in
lenders are under prompt corrective action (PCA) framework, which restricts their normal lending and is a bone of contention between
note ban move from finance ministry, said despite its high costs, NPA recognition has led to improvements in operational risk assessment at
state-run lenders."it appears to have led to a greater discipline in credit assessment, higher sensitivity to market risk and better
appreciation of operational risks," he said
Mr Das acknowledged that some of cases referred for resolution under two-year-old bankruptcy framework have lagged time-lines, but said
sector, saying non banking finance companies (NBFCs) need to be more prudent on risk-taking and also underlined need to rebalance excessive
Both banks as well as non-banks need to be diligent, prudent and follow sound risk management practices as they support growth needs of
economy, he said.Mr Das said slowdown in GDP growth to 7.1 per cent is slower-than-expected, but pointed out to an uptick in gross fixed
capital formation along with dip in crude oil prices as a positive for a sustained growth going forward.Globally, threat of trade war which
would have weakened growth prospects has softened, he said
A stricter enforcement of global trade and investment rules could potentially lead to market stability and win-win bargains in trade, Mr Das
said.(This story has not been edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
