Moneylife - Linkedin Moneylife - Facebook Moneylife - Twitter Moneylife - Youtube Moneylife Rss feed
close

Moneylife » Economy & Nation » Money & Banking » Corporates responsible for rising NPAs, says RBI Deputy Governor

Corporates responsible for rising NPAs, says RBI Deputy Governor

    • 0 Comments, Be the first to comment
  • + COMMENT

MDT/PTI | 22/11/2012 12:00 PM | 

In the first two quarters of 2012-13, banks referred a record number of 74 CDR cases, involving Rs40,000 crore for restructuring

New Delhi: Holding corporates responsible for a major part of the rising bad loans, Dr KC Chakrabarty, deputy governor of the Reserve Bank of India (RBI) said honest borrowers are paying for the sins of 'inefficient', reports PTI.

 

"Again non-performing assets (NPAs) is creation of the corporate sector, a major part of the NPA. You borrow from banks, you don't pay them in time. They becomes NPA in the books of the banks. I pitty on bankers," he said at an event organised by Assocham.

 

"So why you are not able to pay back because your cost is more, income is less. You don't pay back the money. This can be possible only with the improvement in the productivity and efficiency," he said.

 

In a worsening trend of companies failing to meet their financial obligations, banks have seen a rise of up to 85% in bad loans since the beginning of the current fiscal.

 

In the first two quarters of 2012-13, banks referred a record number of 74 corporate debt restructure (CDR) cases, involving a total debt amount of Rs40,000 crore for restructuring.

 

Chakrabarty further said if corporates are able to bring down the risk perception of banks, interest rate could be reduced in their benefit.

 

"If you (corporates) can bring down risk in the economy, if the bank perceive that there is no risk, your interest will become 9-10%," he said, adding that if 5% NPA becomes 1% then this can be done".

 

"Today what is happening is a person who is sincere, who is honest, he is paying money and the fellow who is inefficient, who is not able to do the business, is not paying the money. It becomes NPA. Its cost goes to the fellow who is paying the money," he said.

 

"The bank would charge another 2% from the fellow who is paying. We must look at this aspect little bit more dispassionately," he added.


Post Comment
Be the first to comment
Moneylife Magazine
Daily Newsletter

1,00,000 Readers

Follow Moneylife
DNL facebook icon DNL linked in icon DNL twitter icon DNL youtube icon DNL rss icon

What's your say?

How you file your income tax returns?
Online
Offline
Through CA
 
Enter Code : secure code
    change code
VOTE

What you said

How do you rate the first budget of Modi Government?

Thanks for casting your votes! View Previous Polls