Banks must remain prudent about NPAs, says Pranab Mukherjee

President reminds bankers of their sacred duty to safeguard the money of those who have reposed trust in them

President Pranab Mukherjee on Saturday reminded the country's bankers that it is their sacred responsibility to safeguard the money of those who have reposed trust in them. He was speaking at the Centenary Celebrations of Karur Vysya Bank in Chennai on Saturday.

The President drew attention to the increase in stressed assets, which had impacted the profitability of banks.

He pointed out that the ratio stressed advances to gross advances of scheduled commercial banks had increased from 10.90 per cent in March 2015 to 11.40 per cent in March 2016.

The aggregate provisions made by all scheduled commercial banks consequently rose from Rs 73,887 crore in FY15 to Rs 1,70,630 crore the following year.

 
"As a result, resources available for credit disbursement by commercial banks have been affected and this is not in a desirable situation," Mukherjee said.

He said there is a need for credit expansion in a growing economy like India, and congratulated the Indian banking sector for having fared well, especially during the financial crisis. However, he assertd that banks must remain prudent about NPAs.