Contact Your Financial Adviser Money Making MC
1 March
2017
The
State Bank of India (SBI) on Wednesday said that the Reserve Bank of India
(RBI) needs to give some incentives to banks for resolution of bad loans in
terms of provisions or extending the deadline of March 31 to clean up their
books. The Total Investment &
Insurance Solutions
"Wherever
resolution is being attempted, some kind of incentivisation from RBI in terms
of NPA (non-performing assets) recognition date of March 31, 2017, or in terms
of provisions should be given. If this relaxation can be given, banks will be
encouraged for faster resolution," SBI MD Dinesh Kumar Khara told BTVi in
an interview. The Total Investment
& Insurance Solutions
"Various
professional agencies have got into the process of resolution. I think
consultants are also coming up for managing the stressed assets. Things are
happening but one month is too short for definite results," he said.
Khara
said that though the banking sector is prepared for the worst, whatever be the
regulatory guidelines, it is also putting forth its viewpoint.
He
also notes that in every case, the public sector banks are assured of
government support.
"The
budget statement was clear that if required the government would not hesitate
to support the banks. They will find the means and ways to fund banks. I don't
expect problem on this count provided banks have justified reason for
additional capital," he said.
Meanwhile
Finance Minister Arun Jaitley had sidelined the idea of bad bank on the account
that the taxpayers' money should not be used to pay for corporate defaulters to
banks.
"Creation
of a bad bank or a public sector agency is one of the suggestions. Any
mechanism eventually supported by the Budget should be avoided. If a private
company doesn't pay the bank, then taxpayer should not pay the bank for it,"
Jaitley had said on Tuesday.
Khara
however said: "Bad banks are not essentially expected to pick up bad
assets, but also turnaround these and make them profitable. Bad banks will have
investors who see the turnaround of these assets." The Total Investment & Insurance Solutions
He
said that banks had made assessments based on judgement and assumptions, many
of which didn't turn out the same way but all decisions were not bad.
"All
banks make assessment. Not all decisions could be bad. Banks can segregate such
assets and focus on justified lending," he added. The Total Investment & Insurance Solutions
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