This refers to your editorial
System alert (Business Line dated February
21,2014 ).The rise in banks nonperforming loans at alarming levels
has been a threat to financial stability cannot be taken lightly at this
crucial junction where the economy itself is not performing. Except perhaps the
Dy Governor of RBI who feels that rise
in NPAs is no systemic risk as of now, the professional bankers, financial
experts, the Government and the Reserve Bank have been expressing their
apprehensions on the instability that the NPAs can cause on the Financial
System and the risks thereon. The IMF has been warning off and on the weakening
of bank balance sheets expecting a very stern action from the authorities. Though
RBI has been seized of the problem, and some steps are on to prevent formation
of fresh NPAs and recover the bad loans, the fact remains that unless and until both the banks and borrowers are
disciplined in a very professional manner, this menace of NPAs cannot be minimized
in the banks books with attendant negative results in the economy. The semblance
of Governance system in banks has been virtually absent thanks to laxity in RBI’s
supervision and Government’s interference.It is time RBI goes highly
professional in tackling the NPA issue by some meaningful supervision.
Dr.T.V.Gopalakrishnan
(Sent to BL as letter to Editor on 21/2/14).
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