Discipline both the banks and borrowers to bring down NPAs

If a borrower is having multiple banks and the borrower is classified as non performing by one bank, it is essential that all banks should treat the borrower as an Non performing. This will enable to bring in discipline on the part of the borrower and helps all banks to recover the interests and part of the principal amounts. The ultimate problem in respect of bad debts is that both the banks and the borrowers do not act professionally and treat the borrowed funds as Depositors money and need to be fully accounted for.Indiscipline is the crux of the matter and it should be dealt with appropriately. The approach to get the loss on account of NPAs suffered by banks subsidised by the innocent stake holders of banks ie depositors and shareholders who incidentally include tax payers needs to be discouraged and the loss should be made good by banks and borrowers for their failure in conducting the loan portfolio.The accounts often turn into NPAs because of failure of banks in extending timely credit support, in not properly monitoring the accounts etc and to set right this, the banks also needs to be penalized by forcing them to make additional provisions. From this angle the present policy is an excellent move.

Dr T V Gopalakrishnan