Money & Banking
NPAs of nationalised banks rises to Rs73,038 crore in June

Gross NPAs for nationalised bank, excluding SBI and its associate banks, rose to Rs73,038 crore in June from Rs66,795 crore at the end of March 2012 

 
New Delhi: The Union Government has said the gross non-performing assets (NPAs) of nationalised banks, excluding State Bank of India (SBI) and its five associate banks, have increased to Rs73,038 crore in June, reports PTI.
 
The gross NPAs for nationalised bank stood at Rs66,795 crore at the end of March 2012 against Rs73,038 crore in June 2012, Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha.
 
The nationalised banks include 20 banks excluding State Bank of India and its five associate banks.
 
"Banks are required to monitor their NPAs and take steps to bring them down through recovery or other channels," he said.
 
RBI also monitors the NPA levels in banks, he said, adding the aspect is reviewed during Annual Financial Inspections of banks and monitored on an ongoing basis through regulatory returns submitted by banks and periodical meetings with banks.
 
The channels of recovery available to banks include recourse to Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Debt Recovery Tribunals, Lok Adalats etc., he added.
 
The government has advised public sector banks to take a number of new initiatives to increase the pace of recovery and manage NPAs, he added.
 
The new initiatives included appointment of nodal officers for recovery, to conduct special drives for recovery of loss assets, to put in place early warning system, to replace system of post dated cheques with Electronic Clearance System and to proactively pursue the loan issues with state governments, he added.
 

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COMMENTS

Rajan Manchanda

4 years ago

NPAs.......not alarming at all.

Figures of 2G and coalgate are much more impressive.

Stake dilution in PSBs poses political problem: Rangarajan

The PMEAC chairman says given the large scale infusion needed into 26 public sector banks, a long-term programme will have to be drawn up by the government

 
Mumbai: Acknowledging difficulties in recapitalisation of public sector banks (PSBs), C Rangarajan, chairman of the Prime Minister's Economic Advisory Council (PMEAC) has said reduction in stakes by the government is fraught with 'political problems', reports PTI.
 
"The other alternative of reducing the share of the government in public sector banks poses difficult political problems," Rangarajan said addressing a financial summit organised by the industry lobby FICCI and IBA.
 
His comments come within two days of Reserve Bank of India (RBI) Governor D Subbarao stating that if the government decides to maintain its stake at 57%, it will have to pump-in Rs90,000 crore while if it decides to bring it down to 51%, it would need to infuse Rs70,000 crore.
 
Given the difficulties in arranging money by the government, Subbarao had also suggested diluting government stake in banks below 51%.
 
RBI has mandated domestic banks to make the migration to Basel-III by end of FY18. In order to avoid repeats of financial sector crisis like the one in 2008, a committee of central bankers from across the world came up with the Basel-III norms, which ask for higher capital buffers and also have some re-classifications.
 
Rangarajan said given the large scale infusion needed into 26 public sector banks, a long-term programme will have to be drawn up by the government.
 
If the government fails to re-capitalise, "the market share of the public sector banks will come down", Rangarajan said, hinting at the bank's potential inability to lend given limited capital buffer.
 
In his address, Rangarajan also called for a "periodic entry" of new banks if the Indian banking system was to remain competitive over time.
 
"A closed system can only become oligopolistic," he warned.
 
Incidentally, the Finance Ministry has been sitting on a proposal to make necessary changes to regulatory aspects for allowing entry of new banks.
 
No new domestic lenders have come on the scene of commercial banks for nearly a decade now, Yes Bank and Kotak Mahindra Bank being among the last ones to get banking licence.
 
Rangarajan also expressed concern about deterioration in asset quality of banks in the current slowdown but said that the gross non-performing assets are lower compared to the historic high.
 

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Chakrabarty for less disparity in deposit rates on all amounts

RBI want banks to offer more or less similar rates to all depositors, although a reasonable difference is fine instead of treating poor customers badly by offering lower rates on their deposits and reward the rich with higher prices

 
Mumbai: Reserve Bank of India (RBI) deputy governor Dr KC Chakrabarty has berated banks' tendency to offer better interest rates to high-value deposits, reports PTI.
 
"I don't understand why banks treat poor customers badly by offering lower rates on their deposits and reward the rich with higher prices. I am not saying both should be at par, but the prevailing different rates are bit too high.
 
"We at RBI would want banks to offer more or less similar rates to all depositors, although a reasonable difference is fine," the senior most deputy governor told a gathering at the MR Pai memorial award function (the award was given to women's self-help group Sewa).
 
The late MR Pai was a crusader for the rights of bank depositors.
 
Referring to the minimum balance requirement for savings accounts which currently varies from Rs500 to Rs50,000 for a quarter, and also the varying penalties for not maintaining the required balance, Chakrabarty said, "In fact banks are charging this fee without giving any service to the customer."
 
Therefore, he said, RBI has made it mandatory for banks not to turn down anyone who wants to open a basic bank account, if he/she can provide the KYC documents.
 
On the service charges which banks make customers pay, Dr Chakrabarty (who looks after customer service and banking operations at RBI among other things) said these charges are in fact "survival charges and not service charges".
 
On the need to discourage gold consumption, he said there is a crying need to raise the awareness among the people especially the poor that investment in gold is not productive, and a poor man can never make money by investing in gold.
 
When asked later if RBI is planning to disallow banks from selling gold coins, he said it was not an illegal activity and "hence we cannot do anything".
 
Gold imports touched $60.6 billion last fiscal, which also pushed down trade balance, widening the current account deficit which hit a 30-year high of 4.3%.
 

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COMMENTS

PPM

4 years ago

If it is not possible to make money in Gold, let RBI sell the gold it purchased during last year.

Now, India is ruled by economists who do not know economics and we have bankers who do know banking.

M G WARRIER

4 years ago

If he has not been quoted out of context, Dr Chakrabarty's observation that as selling gold coins is not an illegal activity and therefore RBI cannot do anything is misleading. If it was an illegal activity, law will take its course and the question whether RBI is contemplating any restriction would not have arisen. RBI should play at least a proactive role by discouraging import of gold coins and gold in general for that matter by acting in coordination with GOI to bring domestic stock of gold into the mainstream and encouraging productive deployment of such gold stock. If the Deputy Governor uses his 'good offices' to prevent use of gold for making doors and plating roofs or flag-masts it will be a great service.

REPLY

Ashish

In Reply to M G WARRIER 4 years ago

Gold is Money,which can't be debased according to the Whim and Fancies of Central Bankers and Governments.

If the Clowns in the Government try to Ban Savers from Diversifying into Gold;it will just lead to rise of the next Dawood Ibrahim.

Gold is Money and every Single Indian knows the Truth.

M G WARRIER

In Reply to Ashish 4 years ago

I am with you, Ashish! Gold should get the respectability and grace it deserves. I take your comment as in response to the story rather than my comment. As you used the reply icon, I am clarifying.Thanks M G Warrier

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