Friday, December 27, 2013

NPAs need to be liquidated by borrowers and banks only.

The editorial reads well and carries lot of messages to banks, borrowers and RBI. NPAs are basically created by the banks board, banks' officials and borrowers and as such the prevention of formation of NPAs should begin before and after the sanction of loans. There are several abinitio NPAs in several banks as loans get sanctioned by the Board without any sort of detailed inquiries due to certain obvious reasons.The present approach of RBI can only help to camouflage NPAs officially and will be an exercise in futility involving additional expenditure, time and cumbersome procedures. The ideal solution is to introduce some penalty for erring banks and borrowers and the funds thus generated can be a cover in case NPAs do figure after continuous monitoring , follow up and supervision on an ongoing process. 

Dr.T.V.Gopalakrishnan

(This comment is in response to the editorial " A stitch in banking time" that appeared on 27/12/13)

 

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