The country's largest lender SBI had reported record gross NPAs in Q3 at Rs40,080 crore and saw an 87.5% spike in its provisioning.
The Reserve Bank asked banks to improve their ability to manage stressed assets, but said there was nothing alarming about an unexpected rise in the non-performing assets (NPA) levels this fiscal.
"Concerns (on NPA) are there. Banks have to improve their ability to manage NPAs.
We have told banks what is their lacuna. They have to improve their information system. But we see that the situation is not alarming. Though this is our concern. Hope banks will be able to manage them," deputy governor KC Chakrabarty told reporters on the sidelines of a function organised by Yes Bank in Mumbai.
It can be noted that following the continued slowdown in economic activities on the back of rising interest rate regime, banks, especially the state-run ones, have been reporting higher NPAs in their books since the second quarter.
The country's largest lender SBI had reported record gross NPAs in Q3 at Rs40,080 crore and saw an 87.5% spike in its provisioning. But private lenders are better off.
The total NPAs in the system are set to top 3% of the total assets this fiscal, against a 2.3% last fiscal at Rs98,000 crore.
But what's worrying the regulator is the an over 300% spike in corporate debt recast this fiscal, which has already touched Rs76,251, against Rs25,054 crore in the previous fiscal. This makes the overall CDR asset in the system to over Rs1.9 trillion.
There are many critical sectors that are looking for CDRs. The textile companies are seeking Rs1 trillion worth of debts.
The discoms are also in bad shape with their debts touching nearly Rs80,000 crore, while many have recently gone for CDRs.
The deputy governor also said the central bank is concerned about the banks selling insurance products through the bancassurance channel, but did not specify the reasons.
Since most of the banks have insurance subsidiaries, they promote selling their annuity and other insurance products through their own channels, which will enable them to have a captive customer base.
Electricity, coal and cement output grew by 8%, 17.8% and 10.8% in February respectively, according to the provisional data released.
The eight core industries expanded by 6.8% in February, against 6.4% in the same period last year, on healthy growth in coal, electricity and cement production.
The infrastructure industries had grown by just 0.5% in the previous month. Electricity, coal and cement output grew by 8%, 17.8% and 10.8% in February respectively, according to the provisional data released.
In the same month last year, electricity and cement production had grown by 7.2% and 6.5% respectively, coal output contracted by (-) 5.8%.
Crude oil production grew by 0.4% in the month under review against 12.2 % in the comparable period of last year. Petroleum refinery products output too grew by 6.2% against a growth of 3.2% in the same month last year.
However, natural gas output contracted by (-) 7.6%. Fertiliser and steel production grew by 4.1% and 4.3% in February as against 4.8% and 18.5% respectively in the same period last year.
During April-February 2011-12, the growth of core industries slowed down to 4.4% from 5.8% in the same quarter last year.
“Our main job is to neutralise the incumbent’s advantage,” said CEC Dr SY Quraishi, at Moneylife Foundation’s seminar “Democracy at Crossroads—Need for Electoral Reforms”
“The ruling party hates us (Election Commission). Our job is to neutralize incumbent’s (party) advantage. Neutrality is important as the entire election process is conducted by the bureaucracy, a professional body. Governments come and go but bureaucracy remains, said Dr SY Quraishi, India’s Chief Election Commissioner (CEC). He was speaking at a seminar titled “Democracy at Crossroads—Need for Electoral Reforms”, organised by Moneylife Foundation and V Citizens Action Network (VCAN).
Referring to the EC’s effort to neutralise the election process, Dr Quraishi said, “That’s why the ruling party hate us. But when they (ruling party) loose the elections, they start loving us.”
One of the ways the ruling party tilts the balance in its favour is by getting the government to release huge advertisements in the newspapers. Dr Quraishi suggested that, “the government-sponsored advertisements to be banned six months prior to polling. These advertisements are actually for the ruling party, and they drain the public exchequer.”
Another measure to neutralise the ruling party’s advantage is to “ban the transfer of the election-related officers six months before the election day. As the term of parliament/state assemblies are for a fixed tenure, political parties have a fair knowledge of the probable election dates. So they (political parties) start planting their trusted officers to interfere in the poll process. We do our own intelligence gathering along with monitoring certain officers. This becomes a task for us. We then remove some officers while keeping an eye on others. In the past we had removed chief secretaries, home secretaries, DGP (director general of police) from election duties. Not that we are happy doing it. But we strive on neutrality. If we have evidence that a chief secretary is attending a meeting of political party then we have to take action against him.”
He gave an interesting anecdote about one police officer working at a behest of a political party. “Many political parties had complained against a particular officer from Tamil Nadu, acting as an intermediary between the parties. He also used to order every SP (Superintendent of Police). Normally we don’t touch officers dealing in security and intelligence. But since there were complaints we had to address the issue. We asked this officer to go West Bengal as an observer. However, he refused citing that he has inputs that LTTE (Liberation Tigers of Tamil Eelam) has a ploy to kill some of the top politicians and to create disturbance. However, we smelt a rat and cross-checked the details with the home secretary, who refuted them and also said that the officer no longer belonged to a particular wing. Further we told the officer that any if disruption was created during the poll days, he would alone be responsible for it. Instantly he asked for leave to go abroad. And he actually went.”