Fri. Mar 29th, 2024
Shaktikanta Das

The stressed assets scenario “looks manageable,” says RBI governor Shaktikanta Das, who noted that the stock of gross non-performing assets (NPAs) remained constant even after the second wave of the infection.

In the conference organized by the two leading publications- The Indian Express and the Financial Times, Das said, The banking system’s gross NPAs stood at 7.5 per cent whereas, for non-bank lenders, it was even lower.

As of March, the system’s GNPAs were at 7.48 per cent, the first quarter after banks had assimilated the post-moratorium impact. Following the baseline projections in the RBI’s bi-annual financial stability report published in July, the GNPAs may rise to 9.80 per cent in March 2022.

“According to the numbers, which we have, currently the NPA levels look manageable. The last data, as at the end of June, for the banking sector, is about 7.5 per cent GNPA and (for) NBFCs, it is little less than that,” Das said.

He claims that banks have capital buffers of over 16%, while NBFCs have capital buffers of 25%, which are far higher than regulatory standards and will enable them to deal with any crisis.

The governor noted that the debt restructuring programmes for small borrowers, which were established in August of last year and May of this year, are not open-ended since they require a start and end date.

Also, banks are required to set aside 10 per cent of the outstanding upfront as provisions, so that in case some asset goes back, they have funds to take care of it.

In response to a query about banks discounting in bankruptcy cases, Das said the Insolvency and Bankruptcy Code procedure has to be improved, which would entail legislative reforms as well.

“Yes, I agree that there is scope for improvement in the functioning of the IBC and framework. There is perhaps a need for certain legislative amendments also,” he said.

Governor Shaktikanta Das acknowledged that there is some possibility for recovery from the insolvency and bankruptcy process. The primary goal of IBC is to resolve problematic assets so that the firm may continue to operate. He said, “There is scope for some improvement and the time taken in the entire process I entirely agree needs to be reduced by simplifying certain procedures and wherever necessary by carrying out legislative change.”

By Harshita Sharma

I bring to you updates from business, policy and economy spectrum.

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