Sandeep Dikshit
Tribune News Service
New Delhi, August 25
The findings
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Banks must shore up governance standards
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NPAs may rise by 1.5 times over March levels due to "severely stressed scenario"
The Reserve Bank of India (RBI) has estimated the income loss due to 68 days of lockdown at nearly Rs 3 lakh crore and asked the government to urgently infuse capital in public sector banks (PSBs) to avoid a banking crisis.
Releasing its annual report for 2019-20, the RBI warned that the financial health of banks would be badly battered by the moratorium on loan instalments, deferment of interest payments and restructuring of loans unless they were closely monitored and judiciously used.
This cautionary observation comes against the backdrop of Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman closely monitoring loan disbursements from PSBs and exhorting bank managers not to be risk-averse. The World Bank's latest assessment also took note of the stress on PSBs and advised the government to taper off their priority-sector obligations to help them survive.
The RBI said although the NPAs (non-performing assets) had come down in March, the pandemic is "likely to test this resilience", especially since the regulatory accommodations announced in the wake of the outbreak have "masked the consequent build-up of stress".
from The Tribune https://ift.tt/2CXvvZ1
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