Sinha warns banks on NPA

Sinha warns banks on NPA
ENS ECONOMIC BUREAU

NEW DELHI, JAN 12: Public sector banks have been advised to find alternate resources for meeting the re-capitalisation norms prescribed by the Reserve Bank of India. Finance Minister Yashwant Sinha who had a meeting with the chief executives of the public sector banks today said that it would be difficult to find resources for meeting the prescribed re-capitalisation norms.

The Finance Minister urged the bankers to quickly liquidate NPAs and he said that this could be done by two-phase process, one by not allowing fresh build up of NPA and, two, by taking care of the existing NPAs. Sinha regretted that in spite of the decisions to reduce NPAs, further NPAs had been added in the last two-three years. He suggested that the bankers should deliberate on creation of asset reconstruction company and settlement advisory committees in banks so that the problem of NPAs was sorted out.

He also said that the question of procedures for advances, appraisal and disbursement of loans should be examined so that it became more transparent and effective. The Finance Minister expressed concern over the declining credit deposit ratio and unsatisfactory customer service in the banks and urged the bankers to work out separate mechanism to address this problem. He said that in view of the globalisation of the economy, financial sector could play a major role.