New Delhi, Jul 16
Strengthened by the Banking Regulation ordinance, RBI is expected to take a call on bad loans worth 8 lakh crore by March 2019. This move could help lower the non-performing assets (NPAs) and improve the financial health of banks.
According to a study by ASSOCHAM, “It should be safe to assume that the NPAs mess would largely be resolved by the first quarter of financial year 2019-20.”
This would be helped by a combination of several factors – turnaround in the economic cycle and some resolute steps by the government and the Reserve Bank of India to fix the issue,” ASSOCHAM study titled NPAs Resolution: Light at the end of tunnel by March 2019.
In a study titled, ‘NPAs Resolution: Light at the end of tunnel by March 2019’ ASSOCHAM credits turnaround of the economical cycle and some resolute steps by the government and RBI for creating a hope for a quick resolution.
The report also talked the current stressed of banks and possible use of IBC resolution mechanism in order to clear the balance sheets of banks. Currently, the NPAs pose a challenge to the financial health of banks, especially public sector banks.
The current state of bank balance sheets express little or no capacity of banks to engage in new corporate lending which is essential for pushing subdued private sector investment, according to the study.
Releasing the report ASSOCHAM Secretary General D S Rawat said, “It is to be noted that 16-month Asset Quality Review (AQR) exercise that ended in March 2017 pulled out NPAs from the closet and after this deep surgery strong medicine was required to quickly heal the system.
On releasing of the report, Secretary General of ASSOCHAM, D S Rawat said,” It is to be noted that 16-month Asset Quality Review (AQR) exercise that ended in March 2017 pulled out NPAs from the closet and after this deep surgery strong medicine was required to quickly heal the system.”
“So, somewhat bitter medicine came in the form of the Ordinance promulgated by the President in May. The government gave wide- ranging legislative powers to the Reserve Bank of India (RBI) to issue directions to lenders to initiate insolvency proceedings for the recovery of bad loans that have reached unacceptably high levels,” he said.