RBI reviews banks' assets

RBI reviews banks' assets

The country’s top bankers met Reserve Bank of India (RBI) governor, Raghuram Rajan, to appraise the RBI about their asset quality situation in the view of the deadline set by the central bank to clean up the lenders’ balance sheets.

“RBI met select bankers in the public and private sector today in Mumbai. Raghuram Rajan, Governor, RBI chaired the meeting... During the meeting RBI and the bankers discussed various issues including the asset quality of banks and the way forward on improving the quality of bank balance sheets. The discussions will continue,” according to a statement issued by the RBI.

During the monetary policy meeting, Mr Rajan said by March 2017 the banks’ balance sheet will be cleaned up. This means banks will have to make provisioning for bad loans. Whenever they fall short RBI inspectors will rigorously comb the bank books to unearth hidden stress that were yet to be provided. Banks need to set aside capital for provisioning towards stressed assets.

“Governor has already said in the monetary policy that he would like to take steps further strengthen the balance sheet of banks. So the discussion was on what steps should be taken going forward,” Arundhati Bhattacharya, Chairman, State Bank of India said at the sidelines of an event, adding that more such discussions will take place.

Stressed assets as a percentage of gross advances moved up to 11.1 per cent as on March 2015.

Source :BankingUpdates