Banks' asset quality worries top bank

Mumbai: Despite some of the banks reporting improvement in asset quality in their latest quarterly numbers, RBI on Wednesday said the stressed assets in the system is still a major cause of concern.

The level of stressed assets in the industry including gross non-performing assets, net non-performing assets and restructured assets is slightly above 20 per cent of the total advances.

For the timely and effective transmission of policy rates, RBI has identified the speedier and efficient resolution of the non-performing assets as one of the priority areas going forward. The latest Economic Survey observed that the stress on corporates and banks have only intensified inspite of RBI coming out with various schemes to battle non performing assets. This, according to the survey, is taking a measurable toll on investment and credit.

While interacting with the media after the monetary policy meeting S.S Mundra, deputy governor of RBI, said that banks have started using various tools prescribed by the central bank to resolve few NPAs. However, he added that the most important development in the fight against bad assets would be the operationalisation of the Bankruptcy Code. “We will use all these tools on a case by case basis,” he said.

According to him, the higher provisioning requirement for banks as mandated by RBI after an asset quality review has let lenders to deal with stressed assets in the system.